The group buying industry continues to grow as the industry as generated half a billion dollar since commencing in 2010 with some 5,000 deals published and an average of 1 million vouchers sold each month.

Telsyte recorded the industry has grown to be worth $498 million in 2011 but now expects the market to grow an additional 30 per cent in 2012, exceeding $600 million and reaching $1 billion no later than 2015.

The best performing category was physical products such as jewellery, electronics and clothing and now accounts for 30 per cent of the total market.

“Increased focus on physical product sales in group buying will change the face of the industry and introduce competition between deal of the day and grocery and discount online department stores” Sam Yip, Telsyte senior research manager, said.

This year the market will be fuelled by the refocussing of group buying sites on driving customer loyalty.

“In 2012 loyalty programs and targeted deals will continue to drive sales, while leading sites will enhance their mobile commerce strategies and expand their offerings” Yip says.

Scoopon, part of the CatchOfTheDay e-commerce group, was named for the second time to be the leading group buying site for the 2011 calendar year.

Scoopon co-founder Gabby Leibovich attributes the site’s success on deal quality over quantity, organic and loyal membership base, as well as an industry leading commission structure.

“It’s a true David versus Goliath battle,” he said. “The international entrants have come in and exerted their weight with massive spend on marketing campaigns and recruited an army of hundreds to try and buy their way into the Australian market.”

“We on the other hand have always let our deals do the talking, and despite little marketing effort have built the country's strongest and most loyal membership base of over 1.8 million members who have signed up simply because they are genuinely interested in what we have to offer.”

Leibovich believes that leadership in this space comes down to the ability to source outstanding deals day in, day out, and ensuring a quality experience.

The other frontrunners of the industry are LivingSocial, Spreets, Cudo, Groupon, OurDeal,, and Ouffer.

“About 95 per cent of the market revenue is generated by the top eight sites,” Yip says.

While there were more than 80 sites in operation in 2011, Telsyte expects that the barriers to entry will increase in 2012 and some sites will fail due to lack of scale.

According to Yip, this year the local group buying sites will battle it out with the multinational players meaning bigger discounts, better quality deals, more offers, and more loyalty programs –  all for the sake of winning and keeping Australian customers.