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Group Buying in Canada in 2010 – Groupon Finishes Strong, LivingSocial Stalls and the Big Media Players

It has been quite a 2010 in the group buying space. Lots of activity in the last quarter including, Google’s attempted purchase of Groupon, Amazon investing in LivingSocial and the amount of players entering the space is staggering. Of course much of the news is dominated by what comes out of the US, but what about Canada.

I recently did a post, December 2, titled, Groupon Twice the Size of Living Social in Canada … In Terms of Revenue which was on the heels of the post done by Mashable, By Traffic, Groupon Is Ten Times Bigger Than Its Nearest Competitor that compared the revenue up to November of these two players. As you can see from the graph below, both players were showing pretty good signs of growth.

Groupon and LivingSocial revenues in Canada, up to November 2010

However, now that December is behind us, how did Groupon and LivingSocial finish the year off in Canada? This graph pretty much says it all:

Groupon and LivingSocial Revenues in Canada

What the above does not include, at least for LivingSocial are two pieces of data – 1) is data from ESCAPES, their travel service and 2) LivingSocial, through their site does not breakdown multiple deals in terms of what % of people buy a larger valued deal segment. That said, even at 100% of users who may purchase the larger amount, this would only account for an additional 10%. Considering that December should be one of the best months, it is surprising to me to see LivingSocial stall like this.

DISCLAIMER: these are estimates based on tracking the URLs of these companies. They are not provided by either company.

2010 saw alot of new players entering the space. My current count is that there are 43 players in the group buying space in Canada. As reported today on the YIPIT blog, one of their predictions (2011 Daily Deal Predictions: Thousands of Sites, A Super Bowl Ad, Credit Cards and More) is that Groupon is going to face competition from existing publishers. Here is what they said:

Prediction: Existing Publishers will become Groupon’s biggest threat.
Verdict: Mostly true. Travelzoo, OpenTable and Yelp regularly outsell Groupon in their markets. Thrillist and DailyCandy look to be serious up and comers. Dozens of traditional print media companies have rolled out deal offerings, to varying degrees of success.

source: YIPIT

Players to watch in 2011 in the Canadian Group Buying Space:

Yellow Pages Group
- Under the RedFlagDeals and LesPac in Quebec market. Look for them to continue to expand their offering across the country. This is one player who could bring group buying to ever market in Canada.

TorStar
- Under the WAGJAG brand they are showing innovation in their approach and leveraging their strength inside the Ontario market. Outside of Toronto or the southern Ontario market, they don’t have nearly the strength

PostMedia
- Recently they launched SwarmJam and have presence in the major markets across Canada. If leveraged properly, PostMedia could have success in this space, but so far, results are mixed. Curious business model here as to whether PostMedia would have made more money selling ad space to the Deal of the Day providers as opposed to making the investment in the platform themselves – time will tell.

Kijiji
- although not considered a publisher (in the traditional sense) they are large enough to be included here as a player to watch. Launched under KijijiDeals.com (nice brand extension) so far they seem more like they are in testing mode as opposed to full blown launch. They have user reach, but without a sales force, they might be limited.

Outside of major publishers 2 other players that are getting some traction include DealFind.com (from the guys that brought you menupalace.com) and TeamBuy.ca. Both of these players have done decent jobs of expanding and filling deals across the county. In my view, the 2 biggest challenges they face – 1) they don’t have alternative revenue streams, although teambuy.ca is licensing its platform and dealfind still generated revenues from MenuPalace and they run a lean operation, and 2) their acquisition costs will continue to rise as more players come in, so remaining profitable will be a challenge.

All in all, this will be an exciting 2011 in the group buying space. At the end of the deal, the ultimate winner is the consumer.

Groupon Twice the Size of Living Social in Canada … In Terms of Revenue

Earlier tonight Mashable posted, By Traffic, Groupon Is Ten Times Bigger Than Its Nearest Competitor in which they showed the market share of group buying sites. See below.

Groupon Share of Traffic Reported by HitWise

ComScore is not showing nearly the spread between Groupon and LivingSocial in the US. See graph below:

Comscore US Traffic for Groupon Compared to LivingSocial

In Canada, according to ComScore, here is the traffic trend for both Groupon and LivingSocial.

Groupon and LivingSocial Traffic Reported by ComScore in Canada

My last financial post about Groupon was in August, Groupon Has Saved Canadians $4.6M and Hits $2.5M in Gross Sales in Canada, and prior to that was in June, Groupon Hits $1M in Gross Revenue in Canada.

So, according to Mashable the above graph shows the traffic trend. What about revenue? I can’t speak for any market outside of Canada, but the following graph shows the gross revenue earned by Groupon and LivingSocial in Canada, since their respective launches on April 19 and July 13 respectively.

Groupon and LivingSocial Revenue by Month in Canada

Coming to Calgary (my home town) – Deal of the Day by RedFlagDeals.com

I had a great chat with Cara Sealock, the deal buyer manager in Calgary. She was telling me about how exciting it was to speak to local SMBs regarding the deal of the day concept and the reception so far within the Calgary market. If you have not already, sign up to receive offers at DealoftheDay.ca.

Deal of the Day in Calgary

Of course, Groupon and LivingSocial are currently the two most popular sites operating in Calgary, with a host of other guys, however, RedFlagDeals.com is looking to establish itself as it has in Toronto and Montreal. Since Groupon’s launch in Calgary on August 8, they have saved Calgarians over $1.3M and LivingSocial’s since September 16, they have saved Calgarians over $4.6M off retail price – that’s a lot of savings.

For business owners, check out this video that pretty much explains the benefits of participating in deal of the day. If you are interested in participating in Calgary, contact Cara Sealock at 403 204 5746.