Telsyte australian online group buying merchant study 2011


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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. Utilising Telsyte’s comprehensive database of group buying deals, the survey was conducted with a broad range of merchants across all categories of purchase.

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Telsyte australian online group buying merchant study 2011

  1. 1. TELSYTEAustralian OnlineGroup Buying MerchantStudy 2011A research report on the usage, attitudes andintentions of group buying merchants in Australia
  2. 2. 94% OF MERCHANTS H ITARE SATISFIED W ING YTHEIR GROUP BUS GR 22% Businesses ride booming $400M group buying market PROMOTION F OUP BUYING IS 90% IRST FOR MARKETI OF MERC NG THAT SS T M OF MA HE HANTS H 22% EVER USE AVE D Australian businesses are increasingly using group buying as a way to attract customers. The industry is growing 72% every quarter, and will be worth about $400 million by the end of the year. With some 4,000 published deals and 1 million vouchers sold every month from 70 group buying sites across Australia, the uptake of group buying amongst merchants has never been stronger, but as many 90% of local business are yet to try the new form of online marketing and sales.THE MARKET H 85%T TO TRY GROUAS Businesses which have run group buying deals are generally satisfied with 85% saying it was successful. The top reason for merchants to run a group buying campaign was to increase overall customers, closely followed by an increased awareness of their business. As an added incentive, G, PRESENTINGP more than one-third of businesses that use group buying say it can be used to generate more sales during quiet periods.RTUNITY FOR T AN Telsyte’s Australian Online Group Buying Merchant Study 2011 is a representative survey of Australian HE merchants. Telsyte has gathered insights and statistics on the attitudes, usage, satisfaction and INDUSTRY intentions of merchants towards group buying. OF M MOS ERCHA ANO T LIKE NTS W 1BUY THER LY R ILL
  3. 3. How satisfied are merchants with group buying? 39% 6% EXCELLENT POOR 8% MODERATE KEY POINTS › Merchants were asked to rate their overall satisfaction with their group buying campaign. 94% 19% › Only 6% of merchants rated their overall satisfaction as poor. This is an exceptional performance when compared to other forms of marketing. › Over two-thirds of merchants regarded their group buying OF MERCHANTS experience as either very good or excellent. ARE SATISFIED WITH THEIR GROUP BUYING GOOD PROMOTIONS 28% VERY GOOD2 Q: Rate your overall satisfaction with running your group buying campaign – Base: 359 respondents Source: Telsyte Australian Online Group Buying Merchant Study 2011
  4. 4. How many merchants 85% 85% would run another group OF MERCHANTS WILL MOST LIKELY buying campaign? MOST LIKELY RUN ANOTHER GROUP BUYING CAMPAIGN KEY FINDINGS › 85% of businesses that have engaged in › Many merchants that did not want to run a group buying promotion indicated that another group buying campaign stated the they would likely run another group buying main reason why they are not interested in campaign in the future. another deal is because of trading terms. › Many merchants that expressed interest › The merchants that were tentative about in running another group buying campaign running more group buying deals said that have already organised another deal and if they were to run another deal, it would 15% are waiting for confirmation from the group have to be carefully planned out, including buying site to run it. putting restrictions on vouchers, capping › It is also important to note that a few the amount of vouchers sold or limiting merchants have indicated that they might run availability of time when deals can be another deal, but it might not necessarily be booked in. with the same group buying site. NO3 Q: Would you like to run another group buying campaign in the future? – Base: 359 respondents Source: Telsyte Australian Online Group Buying Merchant Study 2011
  5. 5. What percentage of merchants in Australia 90% have run a group OF THE MARKET HAS YET TO TRY GROUP BUYING, PRESENTING AN buying campaign? OPPORTUNITY FOR THE INDUSTRY 10% BRISBANE & GOLD COAST % PENETRATION PER CITY NO. OF SMALL ESTIMATED NO. OF BUSINESSES BUSINESS THAT THAT COULD POTENTIALLY RUN 5% PERTH 13% SYDNEY CITY HAVE RUN DEALS A GB CAMPAIGN PENETRATION SYDNEY 2,624 20,850 13% MELBOURNE 1,408 17,980 8% 7% ADELAIDE BRISBANE & GOLD COAST 1,283 12,995 10% NATIONAL 1,036 PERTH 780 14,845 5% 8% MELBOURNE ADELAIDE 683 9,535 7% GRAND TOTAL 7,814 76,205 10%4 Source: Telsyte estimates using ABS report number 1321.0 - Small Business in Australia, 2001 and Telsyte Australian Online Group Buying Database 2010-2011
  6. 6. % OF RESPONDENTS 0 10 20 30 40 50 60 70 Why are merchants running INCREASE OVERALL CUSTOMERS group buying deals? INCREASED AWARENESS OF BUSINESS MORE BUSINESS DURING QUIET TIMES INCREASED REVENUES ACQUIRE NEW CUSTOMERS KEY POINTS › The top reason for merchants to run a group buying GENERATE REPEAT CUSTOMERS campaign is to increase overall customer numbers (65%). INCREASING OVERALL › Merchants are not focussed on goals that are highly strategic CUSTOMER NUMBERS and require planning such as up-selling and cross-selling. AND AWARENESS ARE INCREASE WORD OF MOUTH › Merchants have a mixed preference to group buying goals THE TOP REASONS TO (sales focus, marketing focus or a mix of both). RUN A GROUP BUYING INCREASE FOOT TRAFFIC CAMPAIGN SPEND MORE (UP-SELL) SPEND MORE (CROSS-SELL) MEASURE PERFORMANCE OF MARKETING5 Q: What goals did you have when running your group buying promotion? – Base: 359 respondents Source: Telsyte Australian Online Group Buying Merchant Study 2011
  7. 7. GOALS NO. MERCHANTS % ACHIEVED WHO SET THE GOAL THE GOAL ACQUIRE NEW CUSTOMERS 99 98% What do merchants get INCREASE FOOT TRAFFIC 75 87% out of group buying? INCREASE OVERALL CUSTOMERS 233 83% SPEND MORE (CROSS-SELL) 60 70% KEY POINTS › Merchants that seek to achieve new customers by and large achieved their goals (almost entirely achieved this goal - 98%). INCREASE REVENUES 108 69% Group buying almost always brings in new customers. › More than two-thirds of merchants acquired new customers, increased foot traffic and increased overall customers. INCREASED AWARENESS OF BUSINESS 192 63% › The industry needs to better help merchants set the right MORE THAN TWO-THIRDS OF goals for their particular circumstance. Critical to this is MERCHANTS ACQUIRED NEW follow-up calls and post deal services. CUSTOMERS, INCREASED FOOT SPEND MORE (UP-SELL) 72 60% TRAFFIC, INCREASED OVERALL CUSTOMERS MORE BUSINESS DURING QUIET TIMES 123 53% REPEAT CUSTOMERS 83 40% INCREASE WORD OF MOUTH 80 39%6 Q: Which of these goals were you able to achieve? (multiple allowed) – Base: 359 respondents
  8. 8. What other marketing channels 22% NEVER USED ANY OTHER do merchants use? MARKETING CHANNELS (EXCL. DIRECTORIES) KEY POINTS › Merchants were asked if they had ever used any other forms of marketing (excluding directories) apart from group buying. › Group buying is the first form of marketing that 22% of merchants ever used. 22% › The industry needs to recognise that there is a significant GROUP BUYING IS THE number of merchants that are inexperienced when it comes to running marketing campaigns. This has probably impacted FIRST FORM OF MASS the overall success rates of merchants running group buying MARKETING THAT 22% campaigns and might have contributed to negative coverage OF MERCHANTS HAVE 78% in the past 12 months. Group buying sites need to reconsider EVER USED ways to service these types of merchants. Providing more time to educate, clarify and follow up on goals. USED OTHER MARKETING CHANNELS BEFORE7 Q: What other forms of marketing other than group buying have you used to promote your business? (multiple allowed) – Base: 359 respondents Source: Telsyte Australian Online Group Buying Merchant Study 2011
  9. 9. Do merchants see value in combining group buying with other marketing channels? 35% SOCIAL MARKETING ONLINE (FACEBOOK & TWITTER) 21% NO 79% YES 11% TRADITIONAL MARKETING ONLINE (EDITORIAL & BANNER ADS) 54% MARKETING FLYERS OFFLINE KEY POINTS › Merchants were asked if they saw any value in combining other forms of marketing with group buying. 79% KEY POINTS › 54% of merchants see value in offline marketing – more specifically the use of flyers. › Group buying sites can develop, or connect OFFLINE MARKETING CONTINUES TO BE AN IMPORTANT MARKETING › 79% of merchants see value in combining OF MERCHANTS BELIEVE GROUP with merchants social media presence to CHANNEL FOR MERCHANTS group buying with other forms of marketing BUYING CAN BE FURTHER ENHANCED further enhance a group buying deal. thus creating an opportunity for group buying WITH OTHER MARKETING CHANNELS sites to move into and combine with other marketing channels.8 Q: Do you see any value in combining group buying with any other forms of marketing? – Base: 359 respondents Source: Telsyte Australian Online Group Buying Merchant Study 2011
  10. 10. ANT O RT MP T ANT TA N LY I POR O RT ANT AT E L IMP What are the most important Y IM O RT TICA DER NOT IMP VER CRI MO 1 2 3 4 5 factors when choosing to run SALES SUPPORT & CUSTOMER SERVICES 4.06 a group buying campaign? CLEARER & EASIER PAYMENT TERMS 4.01 LOWER COMMISSIONS 4.01 KEY POINTS SALES SUPPORT › Sales support and customer service are the most important AND CUSTOMER factors for merchants when choosing to run a group buying promotion. Merchants highly value the relationships they SERVICE ARE MOST INPUT INTO DESIGN AND DEAL TEXT 3.59 have with group buying sites and the best performing sites IMPORTANT FACTORS are likely to have the most engaging sales agents. FOR MERCHANTS › Ability to have input into the design and text of a deal WHEN CHOOSING TO ranks highly. Merchants want a level of control over the messaging that gets published about them on group RUN A GROUP BUYING NUMBER OF SUBSCRIBERS ON THE SITE 3.57 PROMOTION buying sites. ABILITY TO TARGET A LOCAL AREA 3.54 PAY NOTHING UP FRONT 3.449 Q: Rate the following importance factors when choosing to run a group buying promotion on a scale of 1 to 5. Source: Telsyte Australian Online Group Buying Merchant Study 2011 1: Not important, 2: Moderately important, 3: Important, 4: Very important and 5: Critical. – Base: 359 respondents
  11. 11. Three types of merchants have emerged in the past 12 months Seek better deal structures 1 SUCCESSFUL Varying levels of loyalty to sites THE MARKET BEING 85% 2 NEW USERS OF Running deals across various sites RELATIVELY YOUNG, GROUP BUYING 3 TYPES OF MERCHANT OUTCOMES HAVE EMERGED 3 Using different marketing channels 15% UNSUCCESSFUL/TRIAL MERCHANTS Profitability ramifications % OF MERCHANTS MERCHANT TYPE RELATIONSHIP WITH THE GROUP BUYING INDUSTRY10 Q: Would you like to run another group buying campaign in the future? – Base: 359 respondents Source: Telsyte Australian Online Group Buying Merchant Study 2011
  12. 12. Nearly 4000 deals published and 1 million vouchers sold every month VOUCHERS SOLD PUBLISHED DEALS 1,000,000 4,500 911,700 900,310 900,000 4,000 800,000 716,775 3,826 3,500 3,664 700,000 619,915 3,000 600,000 513,658 2,896 2,500 500,000 464,568 394,275 2,353 2,000 400,000 353,587 1,912 1,500 300,000 224,590 1,488 171,830 1,000 200,000 105,596 837 500 100,000 42,840 67,005 18,814 407 526 242 360 0 41 79 145 0 MAY 2010 JUN 2010 JUL 2010 AUG 2010 SEP 2010 OCT 2010 NOV 2010 DEC 2010 JAN 2011 FEB 2011 MAR 2011 APR 2011 MAY 2011 JUN 201111 Source: Telsyte Australian Online Group Buying Q2 Update
  13. 13. Methodology and Acknowledgments METHODOLOGY ABOUT TELSYTE The Telsyte Australian Online Group Buying Merchant Study is Telsyte was established as an independent telecoms research company in 1997. Since then, we have become a leading telecoms, media and ICT analyst firm. We take pride in providing based on a survey of 359 Merchants conducted over 4 weeks accurate, reliable and actionable market insights and advisory services. Telsyte is a business in July and August 2011. unit of a UXC Limited (ASX:UXC). Telsyte has developed the most comprehensive database of group buying deals in Australia, The sample was stratified to the Australian The Telsyte Australian Online Group Buying with over 22,000 deals captured and growing daily. group buying market. The survey had Merchant study is a multi-client closed report a confidence interval of +/- 5.06 with a for Spreets, Scoopon, Living Social / Jump On Data is captured for all of existing and emerging sites and aggregated to form a view on the confidence level of 95%. The survey was It, Ouffer, and Our Deal. It was executed and market. Information is available by Site, City, Location, Category, Price, Discount, National conducted by Telsyte analyst teams and completed independent of any vendor or client vs Local, Vouchers sold, etc. These data points produce a time series, derived ratios and adheres to industry best practice. organisation. Factors were asked in random order other statistics available to clients. Telsyte has been auditing site data through a series of by the survey teams to minimise skew to any interviews with merchants, confirming deals closed and capturing other information such as The survey took 6 to 8 minutes to complete. All average breakage rates and margins. Information and insights are reported Quarterly (Apr, care was taken to remove invalid ratings and particular result. Alternative wording for ‘up sell and cross sell’ was used if the merchant didnt July, Oct) and a full year (retrospective) report is delivered in February to clients importance responses based on detecting a single response across all factors. Interviews understand the terms. (“Getting people to buy were conducted via telephone. Telsyte other things, and getting people to spend more acknowledges and is comfortable with any bias’ than the voucher amount”). that may have arisen as a result of telephone survey. All care has been taken and after ABOUT THE AUTHOR comparing key findings to industry statistics and Sam Yip is Telsyte’s Senior Research Manager responsible for ICT and Digital Marketing other industry bodies Telsyte is confident with the programs. Sam is an experienced industry analyst having held senior positions with sample representativeness. Frost & Sullivan and UXC consulting group. His research and insights have been quoted in major publications such as the AFR, SMH, B&T, BRW, Sky News, Channel 7, Australian IT, ZDnet, Computerworld and other business publications. Sam is an accomplished speaker and presenter having spoken at business and industry conferences in Australia and Asia Pac. Prior to Telsyte, Sam was a Marketing Manager for Sony Pictures Home Entertainment Australia & New Zealand where he headed up trade and customer marketing across retail channels.12