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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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  11. Awwww you guys forgot about CoupMe.com Cute name, great deals and great CS! Love Them!

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  12. Great article Liz. Thanks for the mashup listing out the other Groupon websites out there. Should make it interesting.

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  13. Don’t forget http://www.webpiggy.com in that list, though they are only for Toronto (Canada), since groupon.com has yet to cross the border.

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  14. [...]  0 We know there are lot of entrants in the group deals space — see my recent piece, Groupon and the Wannabes — but now the competitors are seriously bulking up. LivingSocial — which has more than [...]

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  15. [...] know there are lot of entrants in the group deals space — see my recent piece, Groupon and the Wannabes — but now the competitors are seriously bulking up. LivingSocial — which has more than [...]

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  16. [...] know there are lot of entrants in the group deals space — see my recent piece, Groupon and the Wannabes — but now the competitors are seriously bulking up. LivingSocial — which has more than [...]

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  17. You also forgot to mention Lifebooker.com

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  18. [...]      0 Addicted to Groupon, LivingSocial, YouSwoop and TownHog (and the many other Groupon groupies), where the appeal of an amazing expiring deal snags you — but then you get busy and forget [...]

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  19. [...] Daily deal sites are like catnip for web entrepreneurs hunting for good ideas. In most cases, they all look and work the same. But one new Groupon competitor, San Francisco-based HomeRun, has innovated useful social features [...]

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  20. may favorite is http://www.dealsfordeeds.com – started by some friends on mine in DC. It allows users to (at no cost) donate a percentage of every deal to one of three local charities that rotate regularly. So you’re not just getting a great deal like on Groupon or others but making a difference. I hope to see more people take a creative approach as opposed to just copying Groupon.

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  21. my favorite is http://www.dealsfordeeds.com – started by some friends on mine in DC. It allows users to (at no cost) donate a percentage of every deal to one of three local charities that rotate regularly. So you’re not just getting a great deal like on Groupon or others but making a difference. I hope to see more people take a creative approach as opposed to just copying Groupon.

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  22. [...] it comes at a time when far more people are online and comfortable spending money there. It faces scores of copycat competitors, including some that are doing a better job of harnessing social incentives and one, Tippr, that [...]

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  23. [...] inspired. (Increased knowledge sharing might also be partly to blame for the mini-swarms of me-too companies we see these days. There’s a reason they call it [...]

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  24. [...] the hottest area in online commerce though has been the group buying segment with the likes of Groupon and [...]

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  25. [...] the hottest area in online commerce though has been the group buying segment with the likes of Groupon and [...]

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  26. [...] years ago, there was no Gilt Group, no Groupon and no Foursquare. Twitter was still spelled Twttr. And the big tech magazines still carried [...]

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  27. [...] years ago, there was no Gilt Group, no Groupon and no Foursquare. Twitter was still spelled Twttr. And the big tech magazines still carried [...]

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  28. [...] Boston-based BuyWithMe, a direct competitor of Groupon and the many other daily deal sites, today filed with the SEC that it had raised $16 million from investors including Matrix Partners. [...]

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  29. [...] like they’ve gotta downsize at some point. Groupon has the largest tap on the market for now, but who’s is next? Can any of these other dark shopping horses emerge from the woodwork to get on my [...]

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  30. [...] said he also understands the demand for the abundance of U.S. Groupon competitors, because until recently Groupon only offered one deal per day per city. Mason called the [...]

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  31. [...] clear that the market is a zero-sum game — LivingSocial and other competitors (some of whom Liz described in a recent piece on “Groupon Wannabees”) could carve out some local market share for themselves, particularly through partnerships like the [...]

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  32. Not really a wannabe but I check http://GrouponBot.com more often then Groupon

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  33. From a consumer perspective, these coupon deals are truly GREAT! I buy them all the time, but from the Vendor(Customer) perspective, I doubt monetization happens after the coupon is used. And the coupon offer itself is loss maker. I was just discussing this with one vendor that I used and it dawned on me that the 1 hour meeting I had with him on my customer experience, suggestions for improvements and subsequent monetization once he’s got the new customer acquired, is something that these business owners don’t have a clue about. I think there’s a business opportunity for post-Grouponing….I’m in the travel biz and a site a-la-la CruiseCritic.com would be a win-win three ways. If there’s anyone here interested in partnering up and starting something email me please..Thanks.

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  34. Philadelphia also has dealyo.

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