Group buying giant Groupon buys Melbourne deals site

Melbourne deals site Crowdmass has been acquired by StarDeals, the local operation of international group buying giant Groupon, in a move that signifies just how fast the coupon market is expanding in Australia.

The site, which was designed and operated by three university students in their early 20s, has been sold to Groupon for an undisclosed sum, although Groupon has said the move was made in order to secure the talent rather than the Crowdmass infrastructure.

StarDeals was contacted for comment this morning, but no reply was received before publication. Local managing director Alexandra Podeanu has told the Australian Financial Review that “we were impressed with them and their business model, and wanted them on our team”.

In a statement, Podeanu also said the CrowdMass team was “very much ahead of the curve”. Co-founder David Wei said he was pleased to be part of StarDeals after having built the site “in a relatively short time and with very limited capital”.

A sale price has not been disclosed, although Telsyte senior research manager Sam Yip – who has followed the group buying industry’s expansion in Australia – says the figure is likely to be small.

“The price must be in the small context of the market. Crowdmass was not a major player in the group buying space, although they were a successful small business.”

“In terms of a price, I really think it would be enough for the acquisition of talent, and then perhaps some incentive on top of that.”

Crowdmass was designed by three university friends – Tim Wu, Ying Wang and David Wei. The site itself is a group buying site, providing deals for experiences around the Melbourne area.

Yip says the acquisition – which occurs within just a few weeks of Groupon entering the Melbourne market – shows the company is serious about expanding in the Asia-Pacific region.

“Taking over a small company that has a good hold in Melbourne means they aren’t really starting from scratch. They have awareness there, the merchants are there, so to be honest it seems like a smart acquisition.”

Yip also notes there is more room for acquisition in the group-buying space, pinning Scoopon as the last major target that has yet to be bought by a major player in the entertainment scene.

“All the other players, such as Cudo, OurDeal and Spreets have been bought by the larger players or have been invested in. The last one out there is Scoopon.”

“I think that acquisition is still on the books, especially as Groupon and Scoopon are facing off in a court battle together. We’re at the point now where winning small players won’t get you to number one, and Scoopon seems to be the last target.”

And while questions have been raised about Groupon’s ability to enter the Australian market given the prominence of other group buying sites, and their existing relationships with Australian merchants, Yip says this acquisition proves their dominance is a possibility.

“This is a positive move for them, and if they continue to do this, they could potentially grow to be a very strong player here.”