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Deal-a-Day Spending to Reach $3.9B by 2015

March 7, 2011

US consumer spending on deal-a-day offers is forecast to reach $3.9 billion by 2015, increasing at a compound annual growth rate (CAGR) of 35.1% over the next four years, from an estimated $873 million spent in 2010, according to a report by BIA/Kelsey.

A number of key variables may impact that forecast, BIA/Kelsey notes, such as growth in the number of cities or sites, registered users, average transactions per year, average price per transaction.

Accounting for such variables, the deal-a-day market could climb as high as $6.1 billion by 2015 (a 47.4% CAGR), whereas a very conservative outlook pegs the space at $2.1 billion (19.7% CAGR).

There are now more than 200 players in the group-buying market, targeting an estimated 178 cities (locations) and 102 million people in the US, according to BIA/Kelsey.

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Groupon and Living Social Lead the Pack

Ranked by volume of Web traffic, Groupon and Living Social dominate the group-buying market, with a distant third, according to separate data from Compete

  • Groupon attracted 14.7 million unique visitors in January 2011, down 5.9% from 15.6 million in December 2010.
  • Living Social attracted 10.2 million unique visitors, up 43.9% from 7.1 million from in the previous month.(In January, LivingSocial registered a short-term market share increase from its Jan-19 national Amazon deal in which 1.3 million Amazon gift cards were sold.)

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  • by Jeff Kryger Wed Mar 9, 2011 via web

    I am not sure this is sustainable in the long run. Most companies sign up for a deal once and are done, and there are only a finite number of companies that this makes sense for. I see these tools being used still to fill last minute demand for events and such, but outside of this niche I don't see how it can keep going. But in the meantime it certainly is a boon for consumers!

  • by Ms Porter Tue Apr 5, 2011 via web

    In Australia these group buying sites have really taken off, with the consumer the big winner. One Australian site, started only 10 months ago, was sold recently for $40 million dollars. But it's not profitable (read: sustainable) for most businesses and is being used by many as a cash cow to prop up their short-term cash flow problems. Deals are now being offered that are just straight discounts (eg $400 worth of spa treatments for just $59, 12 months to use on any treatments, come as often as you like, no restrictions), and the experience of many is that the purchasers are simply deal hunters, with no possibility of ever paying full price no matter how great the service or experience. The shame of it all is that if the trend continues, it will mean only the cheap and cheerful players will remain (the ones who do cut corners in terms of products, hygeine, staff pay and conditions etc). This will be bad for the industry, bad for young people's employment prospects and bad for the economy. Group buying websites create no economic output/value, they are simply a way for small businesses to give away their hard earned dollars (and often, reputation). I urge small businesses to think hard before they join in the feeding frenzy - it may just be their last meal.

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