Group buying sites are growing like weeds in the digital commerce space. Every day it seems there's a new one offering discounts to expensive restaurants or a new approach to the flash sale. That's because the category is bringing in revenue hand over fist.
Just yesterday, I wrote about how these sites are using gaming tactics to separate shoppers from their money. And today comScore released some numbers that help explain the growing popularity of these sites. In addition to the great revenue they bring in, they're actually getting people to spend considerably more money online.
ComScore's survey questioned a global panel of 2 million internet users to provide what they call a "360 degree view of consumer behavior." In the last quarer, online spending exceeded 8% of the total retail spend for the first time ever. E-commerce was less affected by the recession than most retail business, and it's performing stronger now.
Six out of 10 consumers say the internet has become important when making buying decisions. And 56% say this has increased over the last year.
That's because many shoppers go online for discounts and deals. And when it comes to those deals, consumers value free shipping highest. Of those surveyed, 78% said that free shipping was the most important cost saving measure in their decusion making process. That's compared to only 38% who said the same of coupons.
And yet, people are flocking to these coupon sites. In April, 29 million people visited an online coupon site.
According to Andrew Lipsman, director of industry analysis at comScore:
"This group buying is a trend that will be here for the long term. The investment is justified."
Lipsman is especially bullish on Groupon, the most popular group buying site, where retailers don't have to follow through on deals until a set number of shoppers buy in to them:
"Groupon has actually transcending its original premise. Just about every deal tips at this point. I don't think there's any suspence anymore... As long as the deals are there, consumers are going to respond."
And respond they do. Visitors to these sites are very heavy spenders.
The average retail category visitor spends 25% more than most online shoppers. But people who visit flash buying sites are spending two to five times more than the average digital consumer. That's impressive.
According to comScore's chairman Gian Fulgoni, group buying sites are "blowing through the maximum numbers that retailers expected. These systems are really appealing to a lot of consumers."
That means we should be ready for a lot more companies using this business model. Lipsman says there is a huge opportunity to move these sites downmarket and capture even larger audiences. And integrating group buying tactics with social media is also an expected growth area.
Comscore says that time spent on social networks is another good indicator of spending habits. Facebook and Twitter users are both heavy online spenders. Says Lipsman: "The more you use Facebook, the more you spend online."
Those are words marketers like to hear. And Fulgoni reiterated the fact that Facebook is a place marketers should be trying to reach shoppers.
"Ignore facebook at your own peril," he said.
Top Image: Rob Lee