Travelzoo Local Deals, which focuses on high quality offerings in primarily the spa, dining, entertainment and beauty categories – and not travel products – have been received well in the US by consumers and investors.

Said Gurrie, “There is also no pressure for Travelzoo Local Deals to do a deal a day there by allowing it to focus on quality.”

He noted, “Loving a deal is universal, although we sure love a deal in Asia Pacific. There is no doubt that group buying websites are the flavor of the month across the world. It is fast becoming a competitive space and therefore a commoditized one.

“I feel this space is likely to see consolidation over the coming year, as each site strives to build their audience. The group buying sites that will win are the ones who have a high quality audience and the ability to stay disciplined to provide amazing deals. They will offer deals that provide true value and engage their audience as opposed to chasing quick dollars.”

Given that group buying sites’ objective is generating new leads for businesses in local areas, Gurrie said that these sales were more conducive to selling F&B, activities and ancillary products.

“Selling coupons in travel is something that will come with challenges. Our industry is built around availability, single image inventory and categories/classes. Coupons style sales are not governed by any of these principles, it is essentially “free sell” leaving the operator to deal with the logistics after the sale.”

Asked what were the pitfalls – for example, high customer acquisition costs vs low margin products and services; in some instances, it is said that group buying sites can take up to 50% of profits – Gurrie said, “Group buying is an advertising solution that is based on revenue sharing, so you pay for what you get as opposed to an upfront investment.

“Although to some, the revenue split can seem high, it allows businesses to advertise their products and services without any risks and limited expertise. For businesses that are not cash rich, this can put them on the map to hundreds of thousands of new customers.

“I feel that there are several key points that participating businesses need to consider for them to achieve a successful campaign with a group buying site.

“Firstly it is important that the business has a need to generate incremental demand to their products or services, this allows them to service additional demand that is stimulated by their tactical offer.

“Secondly there is significant upside for the businesses on the unredeemed portion of the vouchers, unredeemed portion can be around the 20% mark.

“Thirdly it is about the businesses providing great service to capitalise on the life time value of these new customers and creating opportunities to cross sell at the point of sale.

“Lastly, suppliers need to capture the new customers details in a CRM, there is now already a side industry set up to provide ancillary service to suppliers who are participating in group sales.”

Gurrie observed that group buying sites in China, India, Japan, Hong Kong and Australia were becoming commoditized where there is no difference between sites. “They offer very similar products and deals every day. Credibility amongst sites can be won and lost in a single deal.”

As for what advice he’d offer suppliers considering working with group buying sites, Gurrie shared this list.

• Do your home work on the group buying sites audience demographic and past deals that they have run. Align yourself with companies that will treat you brand the respect it deserves.

• It is important that you are not cannibalizing your existing customers by offering them a discount where they would have paid full price.

• Understand your demand cycles and use this platforms as a strategic demand generation tool when there little demand in the market. When the customers come through the door, provide the best service possible to ensure the conversion of these leads into long term customers and up sell at the point of sale.

• Don’t succumb to overzealous coupon sites sales people.

Meanwhile, Gurrie said that Travelzoo Asia Pacific was close to announcing its three million subscribers who receive its weekly Top 20 newsletter.

“These are high quality subscribers who are used to transacting high value travel items. This audience are the people that will leave a tip, buy a bottle of wine and these are the people that merchants want as life time customers.”