How to Compete with Groupon et all
Posted by Seth on Jul 22, 2010 in work | 3 commentsGroupon, Buy With Me, Living Social- they all have strong growing user bases and advertisers/merchants supplying them with offers. So how will the burgeoning set of upstarts compete with the big boys who have such a head of steam? Maybe they can’t if they try and go after them head on.
There are several ways to skin a cat. There is no supply side driven piece of the market, sure big players will draw in advertisers but where is the self serve for merchants? Building a simple bidded market for social shopping offers that is geo-centric would produce a steady stream of high quality offers with maximum user value. Allowing merchants to up their offer, lower their price or overall increase the value to consumers is a no brainier- let the best deals rise to the top. Plus it would allow for easy replication across all cities and towns with minimal sales overhead cost- that money would go to marketing to merchants, but once a city is established those costs can be taken out and applied to new markets.
The second part is to aggregate all the small and mid-sized sites and supply them with deals thus delivering huge volume for advertisers as well as a virtual sales team for sites. There is a reason online publishers use ad networks to supplement their sales. Social shopping should do the same. Roll up remnant inventory in the social shopping space: provide deals in cities not currently served by sites and augment existing cities with more/better deals. End of the day you’ve built a massive distribution engine as well as deal engine but with diversification- and maybe bigger than any single site.
Very interesting – have been thinking about the marketplace model for a longtime. One issue is that the largest five or so daily deal sites probably control as much consumer traffic as the rest combined. That will change once white-label players get in, but it might limit the marketplace system initially.
What do you think of DealOn’s play in the space: OfferEx (http://offerex.com/)?
Jim
Co-founder, Yipit.com
I imagine group-on aggregation will play a huge role in the next evolution in this space. Several are popping up each day it seems. The question is how will group-on defend this space? They take such a high margin on their sales that it’s not a great play for small mom and pop shops, who would benefit much more from localized targeted marketing.
This article is interesting. I’ve actually created a website that’s different from Groupon etc. but is similar as it’s a “Deal website”. Establishments are able to connect with customers, have customers follow their deals and offer an unlimited amount deals for free on their profile page. The user/customer must prepay for the deals to obtain them. Customers can track their savings throughout the year and establishments can track their revenue.
Funny thing is, I started developing this about a year and a half ago before the Groupon saga began! Now that the site’s up and running we’ll see how it goes!
Joel D
President / Founder, http://prepaidtab.com