By Aimee Chanthadavong

The Australian group buying market is currently the fastest growing sector in the online retail space, according to telecoms, media and ICT analyst firm Telsyte.

In its study into the Australian online group buying market, Telsyte revealed that since the market was established in 2010, it has generated $63 million in its inaugural year with most of the revenue coming from the second half of year.

Telsyte senior research manager Sam Yip told RetailBiz that consumers are flocking to group buying sites to seize heavily discounted deals, and local businesses are benefiting from a flood of new customers.

“There’s an increased appetite for discounted good and services. These goods and services are more readily available because social networking sites are propelling these deals to a massive customer base of users.  Technology and social media is also propelling group buying as the face of retail is changing and heading towards social commerce,” he said.

By the end of 2010, Telsyte measured over 20 group buying sites in Australia. The top four sites (Spreets, Scoopon, Jump On It, and Cudo) represented 79 per cent of the industry’s revenues. The Industry currently employees over 350 people and is expected to more than double its headcount in 2011.

Telsyte forecasts the market to grow by 284 per cent to $242 million in 2011.

“At the moment, a majority of the market is health and beauty and food and dining deals so the products are mainly services of leisure and entertainment,” Yip said.

“What we’re seeing is that a majority of the deals are there and we expect it to remain similar this year because there a lot of small business who haven’t come across group buying yet. So we think that they have will continue take advantage of it.

“Also, group buying is still very young and consumers are still getting use to buying these deals and merchants are still getting use to offering them through group buying. It’s still early days.”

According to Telsyte, the group buying market will also soon see agencies representing merchants in deal negations and analytics; the proliferation of mobile group buying applications; and local media publishers entering the market through white-label software platforms, acquisitions, or distribution partnerships.

These predictions come just as US group buying giant Groupon launched its first deal in Australia under the StarDeals brand.

“The market is growing so quickly and only two days ago we were thinking whether Groupon would enter and continue to trade under its StarDeal name or enter through acquisition,” Yip said.

“The top players, such as Spreets, are generating $6 million a month and if Groupon wants top that line and become a market leader they need to match it or exceed that turnover.

“They launched with a $70 three-course meal and that according to our research is significantly higher than the average market price point. So they need to be more in line with the market and they need to compete with the players that are generating $6 million. Depending on their success of StarDeals, Groupon may need to come back with an acquisition. “