Wednesday, December 1, 2010

Groupon Local deals + Local people = Success

     What the heck is Groupon any way? Group buying is the latest and greatest in internet craze.  Why else would google be so interested in buying then.   Groupon has taken the group buying space by storm  . It is a phenomenon that has swept across the US and the world and has defined the “group buying” market.
It is impossible not to be impressed by these numbers. In the past 10 months alone, Groupon has exploded and now claims 30 million subscribers, 3,000 employees, offices in 30 countries and publishes daily deals in 500 cities. In August 2010, Forbes named it the
fastest growing company EVER.

Even though we hear lot about Groupon, people still seem to be getting confused between group buying and private sales sites. Here is a quick explanation:
Group buying /collaborative buying / community buying

  • Customer acquisition marketing tool for local businesses. Requires a minimum number of purchasers to indicate interest before the sale becomes live.
  • Sites include: Groupon, LivingSocial, BuyWithMe, Bloomspot, HomeRun, TippR and now OpenTable’s Spotlight.
  • To be notified of new deals you just need to sign up for their daily deals email.
  • They tend to focus on a hyper-local approach featuring deals in specific markets. Local merchants create deals that are featured on the site, often with steep discounts in order to attract new customers.
  • Promotions can last 24 hours (Groupon) or up to 7 days (BuyWithMe) and normally generate hundreds, if not thousands of new customers.

Private sales sites:

  • Invitation only sites that feature limited time sales.
  • They tend to be more focused on luxury brands, as those brands are the most sensitive to discounting and are more comfortable doing this in a private sale environment.
  • They normally attract less new customers than group buying sites can generate – but the quality of the customers is better.
  • They tend to have higher quality brands and appeal to a higher quality audience.
  • Private sale sites rely on world of mouth and referrals by friends to build their communities.
  • Sites include: Gilt, Rue La La, Jetsetter, Voyage Prive, Vacationist.

  So what is the key to their success?
According to their CEO  Local deals + Local people = Success. There are many reasons I think Groupon has taken off; timing, the consumer’s increased desire for deals, first mover advantage, funding…. it is certainly a challenge for other players to keep up, and as sites are cropping up every day; and many struggle to carve out a point of difference, especially in the eyes of merchants who are all familiar with Groupon, for reasons both good and bad.


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