Group buying bubble gotta burst?
2 Years ago there was nothing. Now there’s Spreets, Scoopon, Jump On It, Lil’ Birdie, Living Social, Crowd Mass, Yellow Pages Deals, Vowcher, Deal Me, Ouffer, Cudo and far too many more. Group buying has taken off in a big way in Australia, almost all of them offering marginally cheaper massages and a couple of other staple offers daily to thousands of coupon junkies. But every bubble that blows up has to burst eventually, doesn’t it?
Marketing magazine spoke with Kara Fraser, the operations manager at Melbourne restaurant Mosq, about her experience as a business using a group buying platform. Fraser used partner companies Jump On It and Living Social to distribute vouchers for her restaurant, and took both good and bad from the promotion.
Jump On It and Living Social, put up our deal on the same day,” Fraser tells Marketing magazine. “There are a certain number of vouchers in total, and when they’re sold, it stops. We put 1000 up on Jump On It’s recommendation. Within 6 hours we sold them out. But in retrospect, we wish we did less.”
Fraser says the positive side was 2000 new customers booked to come through their door, with the opportunity to get repeat business if they impressed. But with 2000 new customers comes a lot of stress as well.
“The negatives were the extra labour that came with the extra activity. You’re just covering your costs with these group buys, but we had to pay someone part time to take the calls, and there is extra labour every night to service more people, who effectively aren’t paying.
Fraser says that Mosq knew they weren’t going to make money directly from the vouchers, and Jump On It pitched it to her as a marketing tool.
“After the voucher went online, we got close to 5000 new hits on our website,” she says. “As far getting recognised, it 100 percent achieved that.”
6 weeks later, diners using vouchers are still coming through the restaurant and there hasn’t been enough time to gauge whether the promotion truly worked in making money. However, Fraser feels somewhat positive about the recognition and would consider an online promotion again.
“I’d probably try something a bit different next time,” Fraser says. “We’d probably restrict the number of vouchers we’d sell. For a venue of our size, we probably wouldn’t give out a thousand again.”
With the group buying industry looking like it’s almost at breaking point, the biggest question is if any of the sites can hang around for the long haul.
“I’ve noticed a lot more of these voucher deals coming through,” Fraser says. “Everyone is always looking for a bargain so they have the potential for longevity, but what’s happening with me now is I don’t open their emails anymore. You get desensitised with all of them coming through and there’s only so much money people have. The risk is they become viewed as spam.”
This marketing magazine writer can certainly attest to that, with about 50 unopened daily deals sitting in my inbox right now. However, like any sales effort, the companies that put people first give themselves the best chance of succeeding.
“I approached Scoopon and it was hard to get on to them,” Fraser says. “They were half arsed about the information they gave me. Jump On It called to arrange a meeting, they came down from Sydney, and sat down and explained it to me face to face. That’s why they got my business.”
What do you think, can Australia sustain a big group buying industry? Please leave a comment below.