Group buying stalls in Asia

Deal sites storm the exit doors

The Asia Pacific group buying market is in consolidation mode due to intense competition, according to a new report from Daily Deal Media.

According to the new report 798 daily deal sites shut down globally in the second half of 2011.

In Asia the contraction was profound with 1,348 Asian daily deal sites swithcing to becoming deal breakers during the back end of 2011.

Daily Deal Media CEO Boyan Josic said that the high rate of mortality for the Asian group buyers was due to China. “It's simply due to the sheer numbers of startups which was also followed by a large percentage of them failing,” he told the Register.

He added that key factors to global consolidation include the increase in subscriber acquisition costs. With lots of deals sites covering the same ground, it's also hard for them to source quality deals, and investors are taking a "wait and see" approach, starving the sector of new capital.

Josic predicts that further consolidation will unfold this year, even more so than the carnage of the second half of 2011. “I also expect more startups to continue to innovate in the space, but the days of the Groupon clones that have no distinctive advantage may be coming to an end."

He added that a key trend will be the integration of daily deal sites with TV and radio editorial. ®