groupon and the rapid changing social buying market trends

Posted on January 5, 2011


stumbled across this great article looking at the trends in social buying (i.e. groupon and other related sites). i really like these businesses and think there is a great opportunity there from a local space perspective. the most interesting thing for me is that they are so many sites out there that there is now a daily deal aggregator market 🙂 to make it easier for people to manage all the daily deals that they could be getting.

this does seem like a winner take all market to many extent as he who has the greatest number of users, will get the most small business and vice versa. the large number of physical sales people that groupon has rolled out is also impressve at 1500, a move that now has been copied by google. however, groupon has just launched a new self service store (see below from business insider). which may give them some more flexibility and offers.


what does this mean for africa and south africa, not very much right now – but i am willing to bet that this will start becoming a significant component over the next few years.

Over the weekend, we learned Groupon is quietly testing a new self-serve offering, with potentially major implications for the future of the company.Today, we found full details on the program in a welcome page to merchants.

Here’s what’s interesting about the program:

  • Merchants can promote self-serve deals. Presumably this means having the deal appear on the side of the city landing page and included in e-mails sent out. This could drastically increase the content available for Groupon to personalize, however, a merchant will not be run as Deal of the Day more than twice per year.
  • Fees are 10% for non-promoted deals, 30% for promoted deals… No upfront costs. Deal of the Day is typically 50%.
  • …but Groupon keeps the “breakage.” This is huge: merchants are paid only for those vouchers that are redeemed. From their Stores FAQ: “When a customer redeems a Groupon, enter the Groupon code into our redemption system. We’ll mail you a check for all redeemed Groupons every two weeks…”
  • Emphasis on Facebook / Twitter like “Follow” function. The product encourages merchants to get current customers to follow their Groupon Stores page. Further, the CRM functionality goes beyond deals: Stores allows the merchant to “share the latest news, deals or specials, or just invite them to stop by.”
  • Real Time Push Alerts. The service pushes offers by stores users follow via e-mails like this:


  • Quality Assured. One risk to self-serve solutions is low deal quality, but according to the page, Groupon reviews all promoted offers.

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