Eating Small Group Buying Companies: Relentless M&a In The Daily Deal Industry
Eating small group buying companies: Relentless M&A in the daily deal industry
Go and hunt the small dealers has become a pronounced motto of daily deal moguls whose clear objectives are to expand operations at global level by guzzling in the local daily deal companies. The acquisition spree has been visible since 2008 when first time juggernaut Groupon started to coordinate with the merchants to give online spenders savings on goods and servicesthough team buying has its origin in Chinese tuango, but in recent past merger and acquisition process has accelerated. Over the past six months, roughly more than 20 mergers and acquisitions (M&A) have occurred in the daily deal industry. This includes both transactions taking place among deal companies and between deal companies and allied industry.
Include in this venture capital changing hands in the daily deal industry and the numbers of transactions fly to reach near 50.
As usual, only few names in the daily deal space are seemingly running faster to expose the internet users to their brand names and get hold of major shares of daily discount market. Nevertheless, the forays involving millions of dollars to the new markets bring about job opportunities and empower consumers to fetch low priced goods and services.
Chicago-based Groupon is noticeable in its design of market expansion on acquisitions. Recently, it is reported to get into India, one of the populous nations in Asia after China, by taking over Sosasta, a budding group buying venture.
Washington-based Living Social, worlds No. 2 social deal site, has perhaps outshined the topper in its resolve of market expansion. One after another, the daily deal company purchased DealKeren of Indonesia, Ensogo of Thailand and the Philippines, and GoNabit of UAE and instantly expanded its coverage areas to 21 countries from 13.
Interestingly, the daily deal magnates have themselves become magnets for investors who are taking serious interests in putting funds into the ventures at the prospects of definite profit margins in the daily deals industry. Groupon, Living Social, and Gilt Groupe amongst 22 daily deal suppliers swallowed in more than $1.69 billion venture capital and other investments over the past six months this calendar year, according to Daily Deal Investment Index 2011.
M&A waves have stormed the world of internet. The daily deal giants are moving towards destinations which have big or untapped markets to cater. For example, Australia, which is turning a saturated market for travel and tourism deals, has reverberate with ubiquitous acquisitions during last one year which in dollar terms run in multimillion dollars: Yahoo bought Spreets, Twitter acquired Ozsale, and the list goes on and on.
What does the splurge of M&A activities have in store for the shoppers and social commerce, a euphemism to lighten up the negative perception made due to profit-prone motives of the daily deal sites? Analysts say new product verticals would be introduced in the daily discount markets and technology transfers would take place.
Critics, however, fear acquisitions of small daily deal companies will exert a fatal blow to the market competition in the group buying industry that still is evolving.
This acquisition is not only within the industry, but daily deal sites are also occupying allied companies e.g. location-based mobile applications developers and providers of mobile deals. LivingSocial has also bought SocialMedia, an advertiser of social networking sites. Similarly, Groupon purchased a mobile solution developer, Pelago.
by: Matt York
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Eating Small Group Buying Companies: Relentless M&a In The Daily Deal Industry