Purple patch for niche sites

Ben Mulcahy’s Pink Rewards website targets the gay and lesbian community. Photo: Jim Rice

Falling revenues for the online group- buying deal sector have not deterred entrepreneurs from proposing niche competitors and chasing a piece of the action. In the local market, total turnover for the channel reached a peak of $158.5 million in the third quarter of 2011, but has fallen since, according research firm Telsyte.

The larger players have dismissed niche players as irrelevant or too late.

Ben Mulcahy is not discouraged by his bigger rivals. “They’re saying the market is full,” he said. “They’re wrong.”

Mr Mulcahy is managing director of Pink Media Group, an advertising network for publications targeted at the gay and lesbian community. He unveiled his niche online deal website, Pink Rewards, last week.

“As a gay man looking at Groupon or Scoopon or any of those current sites, most of their products are not directed at me,” he said.

The advantage for Pink Rewards was an existing relationship with the suppliers of the deals because they often already advertised in the network, Mr Mulcahy said.

Similarly, the readers of the network’s publications, such as magazines DNA and LOTL, act as a ready-made membership database.

Telsyte senior research manager Sam Yip said niche sites that kept their costs low and leveraged off existing suppliers or databases could succeed, but would not grow to be as large as the dominant players like Groupon, Scoopon or LivingSocial.

Tobias Diamandopoulos is the managing director of Trade Saver, a website targeting builders and home renovators that offers both building products and the services of tradespeople. He reckons niche group-buying websites can succeed, but agreed opportunities in the traditional group- buying sector are over. “That market is completely saturated.”

Trade Saver’s product will come from hardware stores, from small independent operators to chains like Hudsons and Mitre 10. “We work on both scales – the smaller local guy who wants to drive business through the door and the bigger operators who want to compete against Bunnings and Masters, but don’t have an online platform,” he said.

Mr Diamandopoulos plans to structure affiliate deals whereby the chains will share in revenue if they drive online traffic to Trade Saver. “We’re not trying to grow organically,” he said. “We’re leveraging off their bigger networks.”

Michael Reid is taking a different view on group buying with his start-up SME Savings. He has negotiated discounts for small businesses with suppliers like BP and Budget car rental. “We don’t flood the inbox,” he said. “We provide a contracted offer.”

About 400 businesses have signed up to the service. Mr Reid’s company is paid a referral fee or takes an ongoing commission on expenditure.

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