The Australian group buying market is showing signs of maturity after it experienced unprecedented growth for the past 12 month, according to Telsyte.

The group buying industry generated $123.5 million in the first quarter of 2012 representing a 72 per cent growth over the same period last year. Despite the growth, the market contracted by 14 per cent on last quarter due to retail seasonality, reduction in overall number of market participants and reduction in the average price of deals sold.

Telsyte also believes that growth is likely to continue to slow down unless the industry starts to once again innovate.

Sam Yip, Telsyte senior research manager, says the need for better customer segmentation and deal targeting is critical to the continual growth of the industry and the traditional model of sending e-mails is starting to reach its peak with consumers feeling a sense of “deal overload”.

“The industry needs to shift it’s mindset from simply providing ‘good deals at great prices’ and introduce new business models and excite consumers once again,” he said.

One company that has played a key role in the market is Groupon Australia, which has been recognised by Telsyte to have contributed to 21 per cent of the overall market share in the group buying space.

Groupon Australia & New Zealand CEO, Tobias Teuber, said the company has also been dedicated to offering customers the best possible deals, while expanding into new markets within Australia.

“We are over the moon with the results which are a testament to the company and the service we offer. Groupon has been setting standards in group buying since its beginning and we’re planning to continue this for many years to come.”

In 24 months, the industry has gone from concept to becoming a key contributor to the Australian eCommerce industry with nearly $690 million worth of goods and services purchased through 14.5 million vouchers sold to date.

With the core business model of group buying having reached a critical point, Telsyte believes the industry must now turn to better customer targeting, and tap into consumer technology trends to usher in a new wave of growth.

“Group buying sites are sitting on a gold mine of customer and business information amassed from the 14.5 million vouchers sold in the past 24 months. The first group buying sites to segment their customers, and offer targeted deals, will take the industry to the next phase,” Yip says.

Telsyte believes the industry needs to champion mobile coupons and location-based deals to spur a new period of high growth. There is an unprecedented opportunity for location based group buying offers as smartphone penetration has already exceeded half the Australian population.

“Although consumers today are able to download mobile applications for their favourite group buying sites, these applications are still in their infancy with most only offering the same deals that are available on a browser,” Yip says.

“The ability to integrate mobile social networking with deals, offer location-based deals, and allow merchants to push deals immediately to customers within their vicinity will be the pillars of growth in the next two years.”

Telsyte expects the group buying market to exceed $600 million in calendar year 2012 and continue growing towards a $1 billion industry by 2016.