The Local commerce advisory firm BIA/KELSEY recently announced findings of their Online Deals forecasts for the upcoming few years. The forecast the space reaching $3.6 billion in 2012, an increase of 86.9 percent over 2011, they project a 23 percent growth in deals spending in 2013, climbing to $5.5 billion by 2016. It must be noted that this forecast INCLUDES Daily Deals, Instant Deals and Flash Sales.
How does this translate for Canada? Typically Canada runs at 10% of USA numbers across most industries. As such, the numbers would be $360 million for 2012 and climbing to $550 million by 2016. One problem with the 10% rule, it does not apply in the fast growing Daily Deal or instant Deals space. Last year, 2011, Canada produced about $400 million in Daily deal sales compared to the USA’s $2.1 Billion. That’s 19% of the USA and that is a HUGE number for Canada. As mentioned before, Canadians love their deals.
Now, this ratio will not last and has in fact come down. Let’s assume that Canada will produce about $450 million for 2012 from Daily Deals, Flash Sales and other Instant type deals. (probably more but let’s go with $450) That translate to a more reasonable ratio of 12.5% of the USA based on BIA/KELSEY’s forecasts.
CHANTILLY, Va. (Sept. 17, 2012) – BIA/Kelsey, advisor to companies in the local media industry, forecasts U.S. consumer spending on online deals (including daily deals, instant deals and flash sales) to reach $3.6 billion in 2012, an increase of 86.9 percent over 2011. BIA/Kelsey projects 23 percent growth in deals spending in 2013, followed by mid-single-digit growth in later years. This translates into deals spending climbing to $5.5 billion in 2016.
“After astronomical growth in 2012, the online deals marketplace is showing signs of maturity,” said Peter Krasilovsky, vice president and program director, BIA/Kelsey. “There has been consolidation in the space, deal conversion rates may be suffering due to over-familiarity and the market may be near saturation. Still, market leaders continue to exhibit growth as market awareness and penetration spread.”
Going forward, BIA/Kelsey envisions online deals will become an anchor for a platform of non-advertising small-business services. These services include instant mobile deals, loyalty products, promotions, reputation management, transaction processing and ecommerce. While these services have already been introduced to the marketplace, they have not made a significant impact on overall deals revenues to date. Eventually, BIA/Kelsey expects they’ll become an anchor element in the broad local play.
Merchant Adoption of Deals
Findings from the latest wave of BIA/Kelsey’s Local Commerce Monitor (LCM) study of U.S. small businesses reinforce the strong continued interest in deals participation by local and small businesses. More than one-quarter (26 percent) of small businesses surveyed said they are either “very likely” (15 percent) or “extremely likely” (11 percent) to participate in a deal in the next six months. An additional 24.3 percent said they are “somewhat likely” to do so, indicating more than half of the small businesses surveyed have a favorable view of deals.