Group Buying fortunes on the up?

Posted on by Billy Tucker

After bottoming out during the past few months, the fortunes of some Group Buying businesses seem to be on the up, albeit a significant number have collapsed or been acquired in the past six months and the outlook remains grave for many more!

The fact that the sector’s nose is slightly up is in part due to the weeding out of weaker and often less scrupulous competitors who often served only to undermine the reputation of the sector as a whole.

In fact out of the 50 largest Group Buying businesses assessed in April, only 29 remain intact just 6 months on. And given only 10% (5) of those businesses were acquired that supports the view that smaller Group Buying businesses are of limited real value. In such a crowded and undifferentiated market lifesaving investment is tricky too given a lack of brand equity, good will or asset strength (off the shelf web sites are common and subscriber base overlap with top-tier competitors is often well over 70%) resulting in the collapse of underperforming and debt laden Group Buying businesses.

A quick browse through the sites of the 29 still standing uncovered indicators of pending doom for some.

Here are the choking canaries of the Group Buying world:

  • A high degree of niche product deals, such as robotic vacuum cleaners or iPad accessories
  • No sign of “number purchased”, an essential component of Group Buying that is quickly discarded when numbers are low
  • Extended Deal deadlines, this industry was founded on deal a day for good reason!
  • A smorgasbord of deals on one page, suggesting desperate recycling of old offers

Group Buying remains a $1bn future industry in Australia, regardless if that industry seemed to lose its way and stall when it was only half way there. Regaining lost momentum will be down to the leading players showing the way once again with a combination of brilliant marketing and a commitment to helping consumers discover great business products.

The strongest already have their playbook (Living Social, Cudo and Ourdeal) and will extend their positions in the coming 6 months through a focus on back-to-basics Group Buying offers like quality restaurants, high value vacation offers and utility products such as Cudo’s Meat Merchant.

Although I suspect another 15 from April’s top 50 will be gone by April 2013, leaving only a dozen or so standing, I think I already know who they are, I wonder if they do?

Profiting from the fundamentals of Group Buying: part 1… Focus

Posted on by Billy Tucker

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Group Buying works for a reason, regardless of the service woes plaguing the industry (which have been driven by a combination of greed and inexperience, not the model itself) the principles behind Group Buying are sound. Over the next few posts, I will explain the key mechanics and position them in a series of non-Group Buying contexts.

There are six key mechanics inherent to the category that are designed to illicit an emotional response, such as an impulse purchase.image

This is the first of six posts I will write that describe those mechanics.

FOCUS ATTENTION ON ONLY A FEW OFFERS

Limiting promotional efforts to only 1 – 3 featured offers enhances the perception of those offers and likely uptake, minimising “noise” around those offers will further spotlight the chosen few. Featuring multiple offers on the other hand dilutes the “WOW” and runs the risk of Paradox of Choice effects.

Most email platforms will support controlled tests, such as sending one control group an EDM with multiple offers, one with the three best offers and one EDM with only a single “hero” offer.

Assuming the control conditions are sound, the likely outcome is that the Hero and “three best offers” EDMs will each provide a click through rate that is greater than the “multiple offers” EDM even though the multiple offers email included the featured offers from the other tests.

Finding the right balance is critical, and running controlled A/B and Multi Variant Tests will find that balance.

Take note, your Audience is growing old more quickly than you are!

Posted on by Billy Tucker

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The average age of an Australian internet user is growing fast; catering for this shift is increasingly important.

According to the Australian Bureau of Statistics, 79% of Australians over the age of 15 are online – meaning adoption is way past the Early Adopter phase (According to the Diffusion of Innovations curve) and well into the Late Majority – at 84% adoption only the Laggards are yet to join!

In terms of age profile, 96% of 18 – 24 Year Olds are already online, so new audience growth will mostly come from older age segments in the coming years. In the past two years, 55 – 64’s joined the web at almost twice the rate of their younger counterparts.

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This new older audience presents an interesting opportunity, by nature they are more considered and loyal (and/or resistant to change), and have an appealing cash pile at their disposal.

Winning the over 55’s is hard though, often they rely on personal recommendations and will Trial only after careful consideration, but they are worth the effort.

So here are six tips for appealing to an older user:

  1. Encourage linger time, provide plain and simple T’s and C’s, lots of expansive detail
  2. Include testimonials, the more the better (including Facebook ads as below)
  3. Be sensitive with lifestyle shots, don’t alienate the older demo with youthful images, equally, avoid images of over 50’s, over 50’s think associate with people in their early 40’s!image
  4. Consider a larger, easy to read font
  5. Leverage Facebook ads such as the one shown here, “friends as fans” work as a testimonial
  6. Take care to provide a generous returns policy, over 50’s are considered and risk averse.