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Summary:

Once you grok the collective buying power idea, the term Groupon starts to seem almost generic. By now, if you live in a major U.S. metropolitan area you can get 5-10 Groupon-type email newsletters a day.

It’s a concept perhaps too simple to get prickly about who originated it, but in November 2008 Groupon launched a daily deal site that offered steep discounts for Chicago merchants, provided enough people committed to buying the deal online that day. In the year or so since, the company launched in more than 30 additional cities, became profitable, and raised a $30 million Series B round.

With 2.3 million subscribers receiving daily emails and 1.6 million coupons sold to date, Groupon has heft. Businesses love getting swarmed by hip insidery customers who’ve already committed to spending money (and Groupon says its customers spend an average of 60 percent above the
value of the coupon). Once you grok the collective buying power idea, the term Groupon starts to seem almost generic.

Like the many online sample sale sites that have sprung up to mimic Vente-Privee, the recessionista-friendly Groupon now has a crop of clones. By now, if you live in a major U.S. metropolitan area you can get 5-10 Groupon-type email newsletters a day. (If you’re a person who likes spa services, you could make out especially well; salons and massage therapists seem to have fully jumped on the Groupon sector’s bandwagon.)

Along with the daily deal email format, each one features bright design, witty write-ups, integration with Twitter and Facebook, ample citations of Yelp reviews, a big click-to-buy button and a countdown clock. Here are some of the ones I’ve found in San Francisco:

* LivingSocial

* Groop Swoop

* TownHog.

Today SocialBuy launched in SF and LA, and another especially cute one called HomeRun is coming to San Francisco soon. Here are some others (many are based in Chicago, where Groupon got its start):

* YouSwoop

* We Give To Get

* MyDailyThread

* TwoBuckDuck

So how big is the greater Groupon economy? Yet to be seen. Collective buying emails fit in between proven one-deal site successes like Woot.com and Steep and Cheap and hip localized newsletters like DailyCandy and Thrillist. But some of the Groupon wannabes are venture-backed as well. LivingSocial has raised venture funding — some $10 million from Grotech ventures and Steve and Jean Case. TownHog, which had formerly tried its hand at virtual betting under the name DotBlu, has raised $2.25 million from Maples Investments, D.E. Shaw, Jawed Karim, Kevin Hartz and Keith Rabois.

  1. sounds like an awesome idea to me!

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  2. In Germany there are already 8 groupon-like ventures (5 alreade launched). We just created an aggragator to stay tuned (http://couponteria.de).

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    1. @Christian – that’s a nice service, maybe you should localize to all the cities served over here too.

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      1. Maybe I’ll give it a try :-)

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  3. I used Groupon and others similar. It rapidly becomes SPAM and started ignoring then unregistered. I gave my feedback to them directly. How to make this not feel as SPAM is the magic to achieve…

    ceo

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    1. @CEO – perhaps you’d prefer to be contacted on a social network? Personally I don’t mind the daily emails, but I wish I were interested in more of the Groupon deals. I suppose my wallet does not mind too much.

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  4. Thanks for the post Liz! Groupon is amazing and we are trying to adapt the model to the German market (http://www.reduti.de). Even though the German couponing market is still young (a law forbid it till 2001), it is growing very fast.

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  5. Daily deals have touched todays consumer sentiment with a sense of urgency, limited availability and recognize that choice is not a selling option, but more a sales obstacle.

    Providing the consumer with the simple question “Do you like to buy this – yes or no?” removes the information and marketing clutter, that stands in the way of conversion in too many of todays offerings.

    You forgot http://www.adilitydeal.com in your listing. According to our research we are the only site, that is currently serving more cities than groupon.

    Though our business is focused on enabling publishers and daily deal sites to use our deal content on their own site, we just started adilitydeal.com to get an understanding of the dynamic of the subscriber/ consumer; and we found as many others >>> conversion = monetization.

    I predict in a year from now that you do not refer to daily deal sites as a group of start ups – and probably many of those listed here will be absorbed. The acquisition costs of the small business deals on a national level in each city is just too high, you need the feet on the street. We leverage on our network of nearly 500 local offices for the content acquisition.

    We trust that daily deals will be embedded as an overall strategy of social media sites and other publishers to monetize their traffic.

    Advertising is fading, conversion is king, monetization rules!

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    1. @Thomas – Thanks for the comment. How are you funded? 500 local offices sounds like a lot!

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      1. @Liz – as a spin off of a company with the feet on the street infrastructure it was much easier and we did not need any additional funding.

        We are self funded, bootstrapped and excited about this space, but we just see it a bit different.

        We have a new platform come out in a few weeks and if you are interested I like to invite you for a private tour.

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  6. does anyone know who homerun is funded by?

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  7. Look for our expansion soon to your city… We expect a great deal of maturity and enhancemetns across this space in the coming months and it’s a pleasure to bring excellent deals from the best spots to our readers.

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    1. Hey Dan, are you guys looking to expand into Tulsa soon? I’d love to heart about your Midwest expansions.

      Thanks!

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  8. In Boston Buywithme just raised $5.5M from Matrix Partners (http://matrixpartners.com/site/press_detail/973/)

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  9. [...] Groupon and the Wannabes It’s a concept perhaps too simple to get prickly about who originated it, but in November 2008 Groupon launched a daily deal site that offered steep discounts for Chicago merchants, provided enough people committed to buying the deal online that day. In the year or so since, the company launched in more than 30 additional cities, became profitable, and raised a $30 million Series B round. GigaOM [...]

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  10. Great article… it seems a new discount site crops up every week. But so many of them are direct copy cats of Groupon’s “collective-buy” business model – which they filed for a patent. Wonder if the newer sites can afford the litigation/ settlement costs if Groupon gets its patent – this will be interesting to see. The value to businesses is each site’s subscriber lists – both size and responsiveness.

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