Analyst: Group buying to become dominant force in online retail

The future of group buying businesses such as Groupon might be uncertain, but group buying itself is only going to be a growing business opportunity according to analyst firm, Telsyte.

Group buying has already become a $500 million industry in Australia, according to Telsyte, and can be expected to grow an additional 30 per cent in 2012. By 2015 it will be worth $1 billion.

Part of this growth is due to a transition, where people are now willing to use group buying to acquire physical products, such as jewellery, electronics and clothing. Previously, it was almost exclusively services.

“We based our research on the increasing number of deals being done, as well as the increasing investment these sites are doing to keep customer loyalty,” Telsyte senior research manager, Sam Yip, said.

While there are doubts about the future of some of the leading group buying businesses, such as Groupon, Yip said the trend for customers using the Internet to acquire cheap goods was one that would stay, and the more “traditional” e-retailers were adjusting their business to get on board the trend.

“If you look at many of those sites, they’ve now got their own group buying functions or deals of the day,” Yip said.

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