ONLINE DAILY DEALS: A BREAKDOWN OF THE PLAYERS AND THEIR FUTURES

by on May 10 in Facebook 0 Comments

Earlier this year, many were shocked when Google offered to buy Groupon for $6 billion. Even more were surprised when Groupon turned them down. Groupon did so because they saw themselves as the leader in a marketplace that was ready to explode. What Groupon offered was a no-risk way for companies to promote themselves. Groupon had built up a database of over 70 million users that had opted in to being sold to.

Just a few months later, Groupon is no longer the only game in town. The market is flooded with Groupon-clones that aim to offer a similar service, but with their own twist that, in their opinion, separates them from the fact.

These services all follow roughly the same formula. Build a database of e-mail addresses that you send out deals to each day. The deal is typically at least 50% off regular price. The service takes 50% of the amount paid by the customers. For example, for a $20 gift certificate, a customer will pay $10, with $5 going to the restaurant and $5 going to the coupon service.

Below is a look at the four big companies that are in the marketplace as well as some emerging players.

Facebook Deals: Only currently available in five cities: Atlanta, Austin, Dallas, San Diego, and San Francisco, Facebook Deals is Facebook’s entry into the online deal marketplace. Facebook obviously has the largest footprint, with over 600 million members, and therefore offers businesses the opportunity to reach the most people. Groupon Facebook will also offer the ability to spread much quicker through the sharing features built in to facebook.

Groupon is the king in the marketplace, for now, boasting over 70 million active users. While Facebook has 600 million users, it is still unclear what percentage of them will opt in to this new program. Groupon is also in the most markets, by far, with 565 markets worldwide. The other wrinkle with Groupon is that the deal is not active until a certain number of customers purchase it. This provides an added incentive for people to share the news with others.

Google Offers is available in three areas: New York City, San Francisco/Oakland, and Portland. After unsuccessfully attempting to purchase Groupon, Google has decided to launch their own online deals program, called Google Offers. Not many details are out yet, but they plan on pursing a similar model to Groupon, while also leveraging Google Maps, Google Adwords, and their Android mobile devices. Their ability to integrate Google Offers into these widely used services will allow them to really separate themselves in the marketplace.

Living Social was the first one to market, dating way back to 2007. Despite that, they have not grown as quickly as Groupon, having less than half the membership base. One thing that LivingSocial has done that is a little different than everyone else is that with LivingSocial, instead of taking half the purchase, they only take 40%. This difference separates them from the crowd in a small but potentially substantial way when you think about the number of customers purchasing the product.

In addition to the big four, many local companies have taken off. In southern New Hampshire, for instance, you have Couptopia and NH Daily Deal offer the same service on the local level. Their lists are much smaller of course, but they are more focused and the deals more often apply to their customers. The amount of users is not readily available, but an average deal on Couptopia is purchased by 500 people.

LevelUp: American Express has entered this marketplace with a new service, called LevelUp. This follows the same formula as the others except they have completely changed the way these coupons are redeemed. With the other sites, you need to print out a coupon and bring it to the establishment. With LevelUp, the deal you purchase is linked directly to your American Express card. When you go to the establishment and use your credit card, it automatically recognizes the deal. You don’t have to remember to print anything out, or even tell your waiter/waitress/employee that you are using the deal. This makes the transaction much cleaner. It also allows you to pay without letting the party you are with (or date you are on) know that you are using a deal.

These services are a great, no risk, way to expose your business to new customers. It taps you into a database of customers that you would normally not have access to.

Have you tried any of these services at your business? Have you purchased from them as a customer? Please comment below or I would love to discuss further with you through e-mail or Twitter.