A Telsyte study shows group buying websites are booming. But are they everything they’re cracked up to be?
The Online Group Buying Merchant Study 2011 was conducted in September 2011 and was based on a random survey of 359 businesses across all leading group buying sites in Australia, including Scoopon, OurDeal, Ouffer, Spreets, Groupon and LivingSocial.
From a retailer perspective, the figures in the study look strong, with findings showing that more than two-thirds of businesses acquired new customers, increased foot traffic and increased overall customers as a result of a group buying campaign. “For brands that are not based around discount pricing policies, there is a risk that participating in group buying sites could damage brand loyalty with existing customers that have paid higher prices. However I think this risk is relatively small,” says Matt Hampshire, CEO and Founder of contiigo.
The study also showed that 85% of businesses indicated they would run another campaign once they tried the service and that 94% of businesses were satisfied with their group buying promotions.
The research is at odds with recent public outcry from disgruntled group buying shoppers who don’t feel that the offers meet expectations. The group buying model is failing many consumers who are finding it difficult to redeem their coupons and some small businesses who are finding they can’t honour their deals due to the overwhelming uptake. Rather than engaging consumers through brand awareness, group buying sites can tarnish a brand if consumer demands are not being met.
At the moment, group buying sites appear to be a double edged sword. So with statistics showing massive growth, will the industry self-regulate to avoid customer disappointment? Only time will tell.