Savvy consumers are cashing in on deals offered by the burgeoning group-buying and daily-discount market, which has grown by 280 per cent this financial year, new data show.

IBISWorld General Manager (Australia), Mr Robert Bryant said the hugely popular online group-buying and daily-discount sector has grown from a base of virtually nothing five years ago to be worth $377 million in 2010-11.

The sector – which includes some of the newest players in Australia’s retail sphere, such as Cudo, Spreets, Ozsale, Catch of the Day and Stardeals – accounts for 1.8 per cent of our total online retail spend of $21.3 billion.

While brick-and-mortar retailers are struggling with sales, which are expected to grow by just 2.3 per cent in 2010-11, online discount retailers are booming. IBISWorld predicts the segment will double its revenue by 2015-16, exceeding $650 million and accounting for 2.1 per cent of online retail spend.

“Offering three major selling propositions – group voucher discounts, clearance goods and travel for limited periods – this sector is now the fastest growing retail platform in Australia”, Mr Bryant said.

IBISWorld has broken down the most popular products and services within the group buying and daily-discount sites by share of daily deals.

Leaps and bounds
The world’s first online group-buying site, Groupon, opened in the US in November 2008. It has now been proclaimed the fastest growing company in history and is estimated to be worth $15 billion, launching in Australia in March 2011 under the brand Stardeals.

Australia already has over a dozen group-buying sites, including Cudo, Spreets and Scoopon –offering an average discount of 60 per cent off normal retail price.

From small beginnings, the market is no longer the domain of small independent operators, with major acquisitions in the past 12 months by some big names. In January 2011, Yahoo!7 purchased Spreets for $40 million; Cudo is owned by Nine Entertainment; the Ten Network owns Our Deal; James Packer has bought into Deals Direct (owners of Dealme.com.au); and Twitter purchased Ozsale for $14 million.

New York-based global hedge fund Tiger Global is understood to be close to securing a 30 per cent stake in Scoopon, which owns Catchoftheday.com.au.

The sale to end all sales – every day

Catchoftheday.com.au is the biggest player in this market with turnover of $110 million tipped this financial year making Catchoftheday.com.au arguably Australia’s largest online retailer. In a bid to compete, Harvey Norman launched its first daily deals site this month, Harveynormanbigbuys.com.au.

Get away from it all – for next to nix

Wotif.com .au is holding tight to its crown as the king of the discount travel and accommodation market, and its parent company, Wotif.com Holdings Limited is also the owner of lastminute.com.au.

In the 2006 financial year Wotif.com’s sales revenue was around $45.5 million. Last year sales rose to $136 million.

The ride ahead

Intense competition between group-buying sites is likely to result in merger activity over the next couple of years – and consumers will reap the benefits.

The general market is somewhat saturated, and Mr Bryant expects any new entrants will focus on niche markets, such as fitness, restaurants and leisure, while others will try to take on Catch of the Day and new player Harvey Norman Big Buys in the clearance goods market.

But no matter who ends up on top, and who buys out whom, it’s the buyers who will really come up trumps.