Free Sample: Australian Group Buying Sites paper example for writing essay

Australian Group Buying Sites - Essay Example

Group Buying (GB) industry is currently the fastest growing sector in Australia. It was established in 2010 and generated AUD$ 63m in the same year. The top eight GB sites (Jump on it, Scoopon, Stradeals, Spreets, Cudo, Deals. com. au, Our Deal and Ouffer) continued to hold 90% of total market share in the third quarter of 2011. Australian GB market generated aggregate AUD $64. 6m revenue in the months of August and September 2011. Jump on it (a site of Livingsocial) is currently Australia’s top GB site holding 29% market share.

Scoopon holds second position with 20% market share and Spreets holds third position with 15% market share. GB market has low barriers to entry while the cost to scale the business is substantial. Australia is politically stable and does not have any significant history of expropriation or interference with foreign investor. Thus ‘Google Offers’ will have a safe political environment to run the business in Australia. In Australia, GB companies require to comply with laws and regulations that protect consumer rights and maintain market efficiencies.

GB sites are required to follow Australian group buying code of conduct which was released on 2nd November 2011. Some economic factors are in favor of Google Offers to start business in Australia. Starting a business in Australia is much easier than any other countries in terms of procedure, time, cost or paid-in minimum capital required. The combinations of cultural and technological factors make Australia as an attractive location for online group buying business. Google Offers is currently being trialed in few cities of USA.

There is no confirmed date when Google Offers will enter in Australia. In terms of market share, Jump on it holds top position, Scoopon holds second position and Spreets holds third position in GB industry. Although some other popular GB sites work in Australian GB market with high competitive advantage, but entering Facebook Deals and Google Offers may create more fierce completion in the market. Competitors in GB market explained in this report in detail. Google Offers should employ its resources and capabilities to achieve superior competitive advantage.

Google Offers must act carefully about deal personalization, execution, design, brand, operations, logistics, flexibility and adaptability to gain competitive advantage in Australian market. This report recommended some critical success factors that Group Buying sites should follow to succeed in the Australian Group Buying industry. Group Buying is a sales tactic employed by Group Buying websites in which they offer products and services at significantly reduced discounts on coupons with limited time condition.

Another condition is that a minimum number of buyers would make the purchase (Australian Group Buying Code of Conduct). The website called ‘Mercata’ first offered high end electronic deals. But ‘Mercata’ had to shut down in 2001 as it could not compete with Amazon. com. Group Buying sites are back as small businesses always look for ways to promote their products or services to budget-conscious consumers (Group Buying). Group Buying business emerged in Australia in 2010 and it is growing at a substantial rate.

More than 500 GB sites are in operation worldwide and more than 80 GB sites are doing business in Australia. The top Australian GB players include Jump on it, Spreets, Scoopon, Groupon Australia, Cudo, etc. Facebook Deals and Google Offers may enter Australian GB industry soon, but the date has not been confirmed yet. This report will critically discuss the detailed industry and competitor analysis for the Australian Group Buying industry. 2. 0 Industry analysis 2. 1 Short and Long Term Industry Trends GB industry was established in 2010 and generated AUD$ 63m.

By the end of 2010, more than twenty GB sites entered in the market. Jump on it, Scoopn, Spreets and Cudo altogether represented 80% of the market share (Australian online group buying market poised for rapid growth). First Quarter in 2011 The industry contributed AUD$45m in forth quarter of 2010 and continued its rapid growth to AUD$73m in first quarter of 2011 representing a quarter-on-quarter increase of 62%. The industry generated AUD$63m in 2010. That means revenues generated in first quarter of 2011 exceeded the revenue generated in the full year 2010.

It was a huge growth for a new industry (Australian online group buying market poised for rapid growth). Second Quarter in 2011 The GB industry generated AUD$123. 9m in second quarter of 2011. The market enjoyed 72% growth in second quarter with over 2. 6m vouchers. The average number of vouchers sold per month was under 900,000. The hot deals came from ‘leisure and recreation’ (121%) and ‘other products and services’ (264%) categories (Australian online group buying market poised for rapid growth).

Third Quarter in 2011 The industry generated AUD$ 158. 5m in third quarter of 2011. It was 28% of quarter growth. The multinational GB sites Livingsocial and Groupon (Australian site is Stardeal) played a critical role in third quarter and enjoyed 75% and 118% growth respectively. Travel deals became largest deal category again in this quarter and account for 24% of total market revenue (Multi-national group buying sites fuel industry growth).

Telsyte anticipated a number of trends that will affect GB industry in coming years. Large multinationals such as Google (Google Offers) and Facebook (Facebook Deals) would enter the Australian market. Merchant agencies will play as negotiator and analytics. Mobile group buying applications will be in the market. Local media publishers will enter into the GB industry through white-label software platforms, acquisition or distribution (Australian online group buying market poised for rapid growth).