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.

1. TELSYTE
Australian Online
Group Buying Merchant
Study 2011
A research report on the usage, attitudes and
intentions of group buying merchants in Australia

2. 94%
OF MERCHANTS H
IT
ARE SATISFIED W ING
Y
THEIR 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
1
BUY THER LY R ILL

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 GOOD
2
Q: Rate your overall satisfaction with running your group buying campaign – Base: 359 respondents Source: Telsyte Australian Online Group Buying Merchant Study 2011

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. NO
3
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. 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%
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Source: Telsyte estimates using ABS report number 1321.0 - Small Business in Australia, 2001 and Telsyte Australian Online Group Buying Database 2010-2011

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 MARKETING
5
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. 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%
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Q: Which of these goals were you able to achieve? (multiple allowed) – Base: 359 respondents

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 BEFORE
7
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. 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. 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 3.44
9
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. 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 INDUSTRY
10
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. 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 2011
11
Source: Telsyte Australian Online Group Buying Q2 Update

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 didn't 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.
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