The online group buying sector will not reach the heights that were initially predicted, as it posts its fourth consecutive quarter of decline.
Between quarter two and quarter three of 2012, the group buying sector saw a minimal decline, dropping from $117 million to $116.8 million, according to research firm Telsyte.
While this decline is significantly less than that of the previous three quarters, it nonetheless represents the fourth consecutive quarter of decline. The previous three quarters had seen 10%, 14% and 5% quarter-on-quarter decline respectively.
Telsyte had previously forecast the group buying sector would pull in $600 million in 2012, however the company has downgraded this to $530 million.
The shrinking market stands as a stark contrast to 2010, when almost every major media company jumped into the space through start-ups or acquisitions, leading to a sudden swelling of the sector.
However, the attitude regarding the sector seems to have turned. Several of the larger players have seen shrinking market share, including Ten Network's OurDeal and Seven West Media's Spreets.
Telsyte senior research manager Sam Yip said now is “the time for consolidation”. He argued the market is only big enough to sustain two large players and five or six smaller players.
“The number of overall sites is decreasing, as the smaller sites find it hard to compete with the big players. This is a very competitive market.”
Groupon and Scoopon have remained the largest players, with over 50% market share between them. In the last quarter, Groupon had 26% market share while Scoopon had 24%.
LivingSocial's share was 14%, while Cudo's was 12%and Spreets had 10%.
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