The aggregate turnover of online daily deals grew to about HUF 16.5 billion last year in Hungary. This market segment, which is now far from negligible, includes general bonus / coupon sites, discount accommodation providers, as well as online shopping clubs. The question is whether the market can continue to expand in 2015, and whether further consolidation can be expected.
Significant discounts, a fast-changing range of products and services, and limited-time special offers that encourage impulse buying. These four features characterise the bonus / coupon market, but other retail e-commerce segments also share these traits; they fit online businesses specialised in discount accommodation, and online shopping clubs alike. These latter players have different business models but share the above characteristics. Overall, they constitute the market known as daily deals, which boasted a HUF 16.5 billion gross brokered business turnover in Hungary last year.
Figure 1: Main daily deals market players in Hungary
Source: eNET, 2015
Let’s examine the players in each of these sub-segments and the relations between them in 2014.
General market: Bónusz Brigád still dominates
The general bonus / coupon market examined by eNET Internet Research and Consulting Ltd. reached a gross brokered turnover of HUF 5 billion in 2014, about as much as in the previous year. While the size of the market did not change much, it underwent major reshuffling. The three largest general bonus / coupon sites by turnover were Bónusz Brigád, Zumzi (formerly Kupon Világ) and Napideal!. This latter player entered the top league last year, ousting Napi Tipp, which had occupied the third position for years.
With a HUF 3.4 billion gross brokered turnover, Bónusz Brigád grew by a remarkable 37% in 2014. This is all the more significant because all other general bonus / coupon market players regularly measured by eNET declined. The rebranded Kupon Világ now operates under the name Zumzi; the change had a very adverse effect on their business as their brokered turnover plunged by almost 50% compared to 2013.
Figure 2: Brokered turnover of the top 3 general bonus / coupon market players in 2014
Source: eNET’s own measurements
The HUF 5 billion turnover of general bonus / coupon market players resulted from 28,319 deals offered, and from slightly over 1 million bonuses / coupons sold. As in previous years, most of the business came from services in 2014. Overall, a steady balance of services and products seems to have set in. As in 2013, services comprised 77% of the total brokered turnover, 64% of the deals offered, and 54% of the bonuses / coupons sold. While the share of services and products more or less equalled in terms of the number of items sold, services brought more of the turnover because their average price was higher. The average deal price was HUF 13,700, HUF 1,900 higher than in 2013. This is attributable to the increased share of higher-priced travel deals.
HUF 3.5 bln gross from discount accommodation sales
Within the general bonus / coupon deal categories, the only exclusive specialisation that has proven viable over time involves travel offers. There are numerous reasons for this; the main factor is the value of these offers, which is usually much higher than other deal types. In 2014, bonus / coupon sites offering nothing but discount accommodation generated a gross turnover close to HUF 3.5 billion. But that is just one part of the online accommodation coupon market because other, non-dedicated players also sell travel bonuses / coupons.
Within travel bonus / coupon deals, three-day accommodation offers in four-star hotels in Hungary for two persons are the most popular, with breakfast and dinner included. The average price of such an offer was HUF 41,400 in 2014, which meant a 50% discount from the average full price.
Online shopping clubs: global brands at discount prices
Online shopping club members can buy high-quality products of global brands for preferential prices. Such websites have gained popularity in recent years. In the beginning, when their portfolios were built up, they focused on discount fashion articles, and specifically clothes, shoes, bags and other accessories. But as online shopping clubs became increasingly popular, their product range was extended to home furnishing and decoration. In 2013, Vivre, a site dedicated to home decoration, joined the long-standing market players Brands.hu and Fashion Days.
The success of online shopping clubs is indicated by the fact that their total turnover in Hungary reached HUF 3.8 billion gross in 2014. Retail e-commerce trends show that the online sale of clothing and home furnishing articles will remain profitable, so such online shopping clubs are likely to grow further.
Odd ones out
Most daily deals businesses clearly belong to one of the three above-mentioned segments. But some sites, such as Csak1Nap and Vatera Sztárajánlatok (formerly Lealkudtuk.hu) are exceptional because, due to their business models, they do not easily fit into the main categories. Still, their aggregate gross turnover was close to HUF 4 billion last year, so they must definitely be taken into consideration when determining the size of the daily deals market.
No bubble, no burst
Back when the Groupon model appeared in Hungary, some analysts envisaged a “bubble” that would “burst”. But for the time being there is no sign of that. The market of online daily deals is stable despite some internal reshuffling. For example, Bónusz Brigád, the leader of the general market segment, has fortified its no. 1 position, while Zumzi (formerly Kupon Világ) was left behind. All in all, the HUF 16.5 billion total brokered turnover of the online daily deals market is proof enough that selling discount goods is a well-working business model in Hungary, and that the size of the market is far from negligible.
In 2015, the main question will be how a gradual economic recovery will affect demand for goods sold at big discounts. The answer will determine if the market segment and the businesses in it can grow this year.