Buytopia acquires six competitors

Canadian group-buying Web site has scooped up six of its rivals during a round of acquisitions spanning the last year.

Starting in May 2012, Buytopia began acquiring smaller competitors and it has now taken over,,,, and These sites will be shifting their deals and customer databases to Buytopia.

While Buytopia co-founder Anatoliy Melnichuk wouldn’t divulge the exact amounts Buytopia paid for the acquisitions, he says his company bought some of its acquisitions for cash, while others will get compensation based on their performance. With these new acquisitions, Buytopia is now up by 800,000 users, bringing its total number of users to about two million, he says. It has another two potential acquisitions in the works.

Group buying sites, which leverage the buying power of several consumers to get cheaper deals on brands, products and services, make up a relatively new industry. With major powerhouse GroupOn Inc. bursting onto the scene in 2008, and the group buying market rapidly mushrooming in 2010, a lot of startups were eager to jump on the bandwagon. Yet that’s now changing as the market becomes less crowded and more consolidated among major players, Melnichuk says.

“When the space first opened up a few years ago, when GroupOn pioneered the space, there were very little barriers to entry,” he says. “What happened is when you have a situation when everyone is really excited about something and they all pour cash into it and start competing with each other, there’s a lot of inefficiency.”

Many of the acquired companies were the ones who approached Buytopia first because they were ready to exit the market, Melnichuk adds. He believes that for a company to succeed in the deals industry, it has to have three ingredients – strong technology in the form of the company’s website; an excellent sales team that can make deals with local vendors and bigger brands; and a way to acquire new users in a cost-efficient way.

It’s also very expensive for smaller group-buying sites to strike up deals with local merchants, says Albert Bitton, president of the Canadian Deals Association. The association tracks online discounts, offers, rebates, and special offers. He views Buytopia’s acquisitions as a great sign for the deals industry in Canada, ranking it as the number six deals site behind GroupOn, TeamBuy Inc., WagJag, Tuango Inc., and LivingSocial Inc.

“Buytopia has always been in the middle of the road trying to creep up,” he says. “They’re very aggressive and they have done a good job in attracting national brands like La Vie en Rose or Sears or Porter Airlines.”

Right now, Bitton believes there are really only a few key players in an industry that once had about 150 companies in the group buying space. Now there might be about 30 to 40 left in the country, with 15 or 20 being big enough to remain relevant, he says.

Bitton says he expects to see even more consolidation in the future, with the number of major players in Canada’s deals industry shrinking even further as more mergers and acquisitions come into play. TeamBuy and Dealfind are a good example of that trend, merging in January to lure in more consumers and to cut costs.

(Image: Buytopia)
(Image: Buytopia)

He adds that in two years, the whole group buying landscape might look significantly different, switching over from providing local offers to discounted products instead.

“Consumers are now getting trained to say, I’m going to go on TeamBuy to shop for Christmas,” he says. “They know there’s always great deals on TeamBuy – it’s not just a deal on a restaurant, it’s a deal on all sorts of stuff, whether it’s makeup or flowers or barbecues or ties or suits, it’s there … it’s just going to be e-commerce.”

Melnichuk doesn’t agree. While Buytopia does offer discounted products, he says his company’s mainstays will still be offers specific to different cities, though he expects Buytopia may shift to a 50/50 split between offering discounted products and local offers.

He also expects regional, smaller brands to stick around. After all, with a site as well-known as GroupOn, a major caveat for small restaurants or businesses looking to set up a deal is that they will never appear on GroupOn’s front pages or as a featured deal. That means less business for them – so a lack of visibility on such a big site might encourage them to turn to smaller group buying sites to get their names out there.

And while Melnichuk concedes the market is no longer sprawling, he says it is still growing and still profitable. People often believe the group buying industry is doomed because they hear of some of GroupOn’s financial woes. Yet Buytopia was built using a lean investment of just $45,000, or $15,000 coming from each of its three co-founders, and it is in the black, he says.

“It’s possible to start a company, grow it from $45,000 to tens of millions of dollars in revenue every year, and acquiring competitors who raise money,” he says. “It shows that the space can make money … It’s more a question of how the business is run as opposed to whether or not the model works.”

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Candice So
Candice So
Candice is a graduate of Carleton University and has worked in several newsrooms as a freelance reporter and intern, including the Edmonton Journal, the Ottawa Citizen, the Globe and Mail, and the Windsor Star. Candice is a dog lover and a coffee drinker.

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