eNET Internetkutató és Tanácsadó Kft.

Bonuses and coupons – the market is cooling

2012. June 28.

The pitched battle for customers between companies selling bonuses/coupons shows no signs of abatement in 2012. The heavy competition is understandable: every survey result indicates that this market is growing just as dynamically this year as it did in 2011. There are more and more buyers of online bonuses and coupons, and the number of offers is growing, indicating that an increasing number of merchants are giving this type of selling a try. The joint research of GKIeNET and the Infocommunication Department of the Corvinus University of Budapest points at Bónusz Brigád as the market leader.

Media reports and statements about online bonus/coupon sales appear almost daily. The interest is justified: this market, valued at 4.2 billion forints, grew out of almost nothing in the course of 2011, and despite all suggestions about its impending demise, the dynamic growth shows no signs of slowing.

At the time bonus/coupon sites started up in late 2010, GKIeNET and the Infocommunication Department of the Corvinus University of Budapest set a goal of measuring the performance of these pages, and that it will present its findings reflecting the developments in the competition. This document is a summary of the research covering the first five months of 2012.

The long tail phenomenon in effect

The long tail effect described by noted author Chris Anderson in 2008 can be observed among bonus/coupon companies as well. Most data points measured at the 20 companies currently being observed (number of offers, number of bonuses/coupons sold, revenue, number of Facebook followers, etc.) clearly indicate that the performance of the top tier is outstanding compared to the rest. In terms of the number of offers, the first three sellers have captured one-third of the market, while in terms of revenues they represent 70%.

This does not mean that the companies with lower revenues are less skilled than the top three, but it was the first market entrants that succeeded in becoming known brands, which in turn is key in attracting merchant partners and masses of consumers. Signs of specialization are more clearly observed in the middle tier of the market. These companies often concentrate on individual segments and special target audiences. Sites in this tier include Babakassza.hu, targeting mothers of babies and NeMaradjLe.hu, exclusively offering travel deals, but Citybrands.hu is also in this category, as it offers a limited number of services to a well defined consumer segment.

Bónusz Brigád in the lead

The top sellers have monthly sales volumes of several hundred million forints each.

In the first five months of 2012 Bónusz Brigád achieved the highest revenues, with bonuses sold worth over 927 million forints. Kupon Világ was the runner-up at nearly 831 million forints of coupons sold, while Napi Tipp came in third with 211 million forints.

 

A hundred thousand coupons sold monthly

Companies emulating the success of the American Groupon and LivingSocial had approximately 5,000 offers in the first five months of the year, selling about half a million bonuses/coupons (an average of a hundred thousand bonuses/coupons per month), with a combined value of over 2.5 billion forints. What this also means is that, based on the original price of the goods and services involved, the real value represented is 6.9 billion forints, leaving 4.4 billion forints in the pockets of consumers. Based on the data of the first five months, the market is on pace to be doubled from last year’s 4.5 billion forint turnover. There are no signs of abatement in the dynamic growth. Deeply discounted goods and services continue to be attractive to Hungarian consumers.

Consumers spend 5,500 forints on an average bonus/coupon, and the average discount is 64%. The vast majority of the offers are available in Budapest; only about one-fifth of the offers (outside of those involving travel) were targeted at consumers outside the capital.

Of the approximately 5,000 offers comprised in the total market, 2,140 are tied to the three major players. About half of the latter number was made up by Bónusz Brigád, with its 1,248 offers, meaning that the company had more offers in the first five months of the year than the second and third runners-up combined.

 

The top three companies are also dominating the market in terms of sales volume, thanks to their 355 bonuses/coupons sold, representing 67% of the market total in the first five months of 2012.

Of the top three market players, Bónusz Brigád alone has widespread and regular activity outside the capital. In the five months under consideration they had a total of 350 offers in seven cities (Debrecen, Győr, Kecskemét, Miskolc, Pécs, Szeged, Székesfehérvár), selling a total of some 22 thousand coupons. In contrast, number two Kupon Világ had only five offers outside the capital, while Napi Tipp had none at all.

 

Primarily services

Almost all bonus and coupon sites offer discounted products. However, the vast majority of offers at the three retailers in focus were services rather than products.

Beauty care offers are the most popular in terms of the number of offers and the sales volume, while travel tops the list in terms of revenues (given the above-average price of 20 thousand forints per bonus/coupon).

 Among the top three market players, Bónusz Brigád had the largest number of beauty care offers, specifically 322, selling 33 thousand coupons in this category. Kupon Világ, ranked 2, and Napi Tipp, ranked 3, had similar figures in beauty-related offers, 100 and 103, respectively. Their combined sales volume, however, falls short of that of Bónusz Brigád.

Community building is important

Active presence on the largest community site is part of the business model, which is not only an excellent communication and advertisement channel, but also a forum where customers can share their comments and experiences with other members of the community, boosting brand loyalty that is crucial to these online sites.

Over the first five months of the year, the three largest market players have shown a marked improvement in this area as well. Between January first and the end of May, the Facebook groups of the three companies grew by 22 thousand new followers, and presumably, the majority of these followers have already made a purchase or will eventually shop on one of the bonus/coupon websites.

 Customer reviews are key components of the community activity, providing feedback and responses to questions, which may help potential buyers. Most bonus/coupon sites use Facebook for these purposes as well, since the external module allows users to add comments to a specific offer on the website using Facebook’s commenting feature. The sellers and service providers also benefit from this solution, as it allows the actual merchants to respond to potential questions or comments. However, not all bonus/coupon companies take advantage of this opportunity. Of the top three firms, only Bónusz Brigád and Napi Tipp do.

In terms of community growth, Bónusz Brigád exceeded all others. Its follower base of 304 thousand, which is remarkable on a national scale, continued to increase by another 10 thousand, to as high as 314,250 by the end of May. The follower bases of Kupon Világ and Napi Tipp increased by 6 thousand people each over the past five months, from 145 thousand to 152,055, and from 83 thousand to 89,474, respectively.

GKIeNET, Corvinus University of Budapest Infocommunication Department

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RESEARCH THEMES
Bonus/Coupon, e-commerce, e-government, e-finance, e-tourism, Electronic Communications, Frequency, Information Society, Information Security, Internet Subscriptions, Internet Economy, Internet usage, Internet Access, Internet Penetration, Internetbank, Internet Commerce, R&D, Christmas, Social Site, Media, Mobile Payment, Mobile Purse, Mobile Shopping, Mobile Internet, Mobile Games, Mobile Phones, NGN, Smartphone , Online Games, Online Shopping, PC, Tablet, Telecommunication Spending, TV, Video Sharing, VoD