This guest post is by Stas Belkov, co-founder of group buying aggregator Dealfetch.com.au. Stas has extensive experience in digital marketing and a deep understanding of the group buying market in Australia.

The past 12 months has seen group buying take off in Australia in a big way, with numerous sites launched in Australia following the massive success of US giant Groupon. In its current infancy, the Australian industry consists primarily of Groupon style clones – sites that feature group deals across a wide range of categories and market to a mass audience. Stardeals, Scoopon, Spreets, Cudo, and LivingSocial are the current major players that follow this model.

The types of deals on these sites vary to a great extent, ranging anywhere from restaurants to spray tans, to notorious canvas prints. This model has proven to be extremely effective, and has attracted a whole range of competitors into the market. With low barriers to entry and a lack of differentiation, it is becoming increasingly difficult to acquire new users, and retain them for future purchases. The concept of brand loyalty seldom applies in the daily deal space, with consumers keen to use deals from any of the available sites, assuming the deal has both relevance and value.

Cue the group buying verticals. While the trend is only just starting to pick up, a number of niche group buying companies are operating or soon launching in Australia. Some of these include Food Morning for restaurants, Drinkle and Nightly for alcohol/nightlife, BizzBuzz for b2b services, 123Cars for vehicles, and of course travel. With travel deals first emerging earlier this year, the segment has seen steady growth, increasing the average daily deal price, while generating hundreds of bookings for hotels in Australia and abroad.

Group buying for hotels and accommodation makes sense – hotel inventory can be sold quickly and in bulk, bookings are boosted during low peak periods, and accommodation can be packaged together with value added services. Consumers are also winners here, obtaining extremely low prices for popular destinations, as well as not having to worry where in the world they should travel, or which additional services and experiences to book; everything has been pre-prepared. Travel group buying creates a kind of window-shopping consumer experience, providing the cream of the crop in travel experiences, while taking weight off the consumer during the booking and research process.

Here are the major group buying players in travel:

LivingSocial Escapes – Launched in early June to accompany LivingSocial’s existing Australian presence. An average of 12 deals exist at any given time. These are primarily focused on Australian destinations, however overseas markets such as Thailand are rising in frequency. Deals last around 7 days, and cover both 1-2 night stays as well as longer holidays.

Getaway Lounge – Launched in late May and backed by Nine Entertainment, thereby ensuring a mainstream media presence on Channel 9. The site features only four or less deals at any given time, however they all tend to be character/boutique hotels, serving the higher end of the market. Similar to LivingSocial, deals last around 7 days, with length of stay varying between several nights, to a week or more. The service does a good job at complementing the Getaway television program, matching it both with content and branding.

MonthlyCatch – Launched in early June, this site is owned by social media consulting startup iGenYZ. MonthlyCatch follows a youth oriented branding strategy with a heavy social media focus. Thailand is a commonly featured destination here, appealing to the younger demographic while providing the industry with a good dose of overseas deals. Another differentiator is deal length – each travel deal is active for 30 days, giving visitors plenty of time for research and purchasing. The site features around 6 deals per monthly period, with length of stay ranging from 2-7 nights.

Also worth noting are several upcoming contenders in the travel vertical. These include TravelFactory and DailyEscape – startups that promise great discounts for top travel destinations. It will be interesting to see how these sites compete with both the large daily deal sites, as well as existing niche services.

While the primary benefit of travel group buying is heavily reduced prices, there is a major pitfall. Consumers are normally not able to customize their travel itinerary, and are limited to sticking to whatever deal is chosen – freedom is given up for lower price. Many consumers will not be happy with this limitation, and will choose instead to use existing hotel price comparison sites to find hotels for their chosen destination. To counter this, group buying operators need to identify distinct market segments, and tailor packages directly to groups of consumers. Local weekend travellers, adventurous young travel seekers, affluent couples and more, can all be targeted. Herein lies the power of group buying; people can purchase off-the-self travel experiences, at great convenience, and lower price. This creates a platform for discovery, allowing consumers to find novel and exciting travel destinations at prices accessible to a wider audience.

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