Algar Yeung, co-founder of one of the first group buying aggregators http://hk.DealsHongKong.com provides insight into this phenomenon, stating that a successful daily deal site is still a lucrative and profitable business.
“We believe that many of these companies are indeed making money, and lots of it. With these businesses taking in anywhere between 30-60% of each deal voucher sold, it becomes a numbers game. As long as daily deal sites are willing to spend money to market to the masses, they should be able to reap the benefits from those generous margins,” Algar said.
As for the rising number of aggregators, he explains it as a result of a maturing industry that is always in need of a place for users to consolidate and disseminate information.
“In Hong Kong, the number of total players in the industry is decreasing, while the number of key players remains the same. We are also seeing an increase in the number of high quality deals that are offered by these key players. Deal seekers will always appreciate a place where they can save money more quickly and effectively,”
Group buying has always been a hot topic with its share of naysayers and doomsday predictions. Carefully looking into the actual data reveals that it if run properly, it can be a viable and sustainable business. Through its first years of inception, many start-ups have haplessly jumped into the fray, looking to make a quick buck. What we are seeing now is not a shrinking market, but a weeding out of the pretenders; where daily deals sites that are willing to invest in the right leadership, marketing, and deal sourcing are outlasting the ones that are not.
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