Should your business use group buying sites?

The launch this week of BizzBuzz.com.au, a site that offers deals to small businesses, indicates that the onward march of the burgeoning group buying sector isn’t slowing down.

With more than 20 group buying sites already in Australia, and niches rapidly being filled by the likes of BizzBuzz and Liquid Deals, saturation point was arguably reached some time ago.

However, is the explosion of group buying sites good news for small businesses looking for a sales boost? The merits of listing a product or service on a group buying site is a consideration that increasing numbers of start-ups have to ponder.

To help you make up your mind, or maybe procrastinate further, here are five pros and five cons of diving into the group buying space.

Pros

Numbers

The plethora of group buying sites in Australia may be relatively new, but they already command a significant audience.

According to analyst firm Telsyte, the group buying market is set for revenues of more than $400 million this year, with industry leaders Scoopon, Spreets, Cudo and Jump On It accounting for 80% of this.

Jump On It, for example, recorded 410,000 unique users in December, according to Nielsen. Such impressive figures mean that your deal is likely to have a decent number of eyeballs peruse it.

Expanded reach

In the first quarter of 2011, 6,000 deals were published across group buying sites in Australia. A large chunk of these will have been offered by businesses that wouldn’t normally be visible to such a large base of potential customers.

As great as your website is, it’s unlikely that it has the breadth of a group buying site. Not only do you get a larger quantity of your target customer, you also expose your business to new markets that you normally overlook.

There are plenty of options

Scoopon, Catch of the Day, Jump On It, Spreets, Cudo, Ouffer, Star Deals – the list of group buying options available to vendors is seemingly endless.

We are already seeing consolidation in the market – witness, for example, the acquisition of Crowdmass by Star Deals – but there still remains a vast choice on offer for small businesses to utilise.

It can add extra revenue

If you run a fixed-cost business, group buying can provide you with handy extra income. For example, if you offer cooking classes, it won’t cost you extra to have a few more people join in for a slightly reduced price. If you don’t have to produce a product that you then may make a loss on, group buying is a winner.

It can shift stock

Inexpensive goods that are hard to shift are tailor-made for listing on group buying providers. Rather than bear the cost and inconvenience of letting underused stock clutter up your business, why not offer them to the masses at a reduced price and reap the rewards of increased awareness at the same time?