This week, Groupon subscribers in Austin, Texas, are offered deals on rock climbing, Indian food and a produce delivery service. Meanwhile, within the same city, users of the Latino-oriented deals site Descuento Libre can buy discounted vouchers for dental care, prepaid mobile phone services and family fun pizza parlors.
Descuento Libre wants to be the Groupon for the Latino market, but its efforts also show how culturally specific such deal sites can be. Last week in Austin I met Descuento Libre co-founder and CTO Boris Portman and discussed the opportunity for his one-year-old startup, which received an undisclosed round of seed funding from Bravo Equity Partners in February.
The youngest and fastest growing segment of the U.S. population, Latinos represent a huge and largely untapped market for e-commerce. With strong extended family and social networks, this group actually uses social media more than any other group in the United States and is much more likely to buy a product endorsed by a member of their network than their white counterparts.
Latinos (both U.S.- and foreign-born) are already showing hints of their online purchasing power. At 18 percent of the U.S. population, they make up an estimated 13 percent of all online sales and spend around an estimated $22 billion on e-commerce per year, according to estimates from Jupiter Research.
Clearly, this group likes to drop dollars on a good deal online, just like everyone else in the nation. Yet only 3 percent of traffic to Groupon and other daily deal sites comes from Latinos, according to Quantcast figures for June 2011.
When starting his site last year, Portman said he was shocked to find that most Latino Internet users and business owners he spoke to hadn’t even heard of the daily deal concept. “While the rest of the country is already suffering from ‘deal fatigue,’ many Latinos have stayed away from the deal sites. They don’t know what they even are. You even have to explain the concept to the Latino business owners.”
While Groupon focuses on new adventures like skydiving or Ethiopian food, deals on Portman’s site are much more likely to involve family activities and household necessities.
Descuento Libre takes Groupon’s hyperlocal market to a new level, and it required a bit more effort to get started. Central call centers don’t work here, Portman says. The bilingual site operates in Mexico City, Austin and Chicago, with plans for aggressive expansion to other U.S. markets this year. But each market requires salesmen who can go door-to-door to network with Latino business owners.
“You can’t cold-call Latino businesses. They will say, ‘Who are you and why are you calling me?’ It’s much more boots on the ground. It’s all about relationships,” Portman says.
He is also advertising to a much younger and more family-oriented group than either Groupon or LivingSocial. Portman says the typical customer is a 26-year-old mother of multiple children with some education and a smaller disposable income than the “yuppie” and “hipster” clientele of other deal sites. Partnerships with traditional Spanish-language newspapers, television stations and popular radio figures spread word in each market.
While Groupon’s average deal price has grown to over $45 thanks to higher-end deals, Portman’s site plans on selling deals in the U.S. between the $15 and $32.50 price point, depending on the market. And as the Latino market grows and shifts, he says his site will address higher-end needs as well.
“There is a clearly a huge untapped market here, but no one has been able to quite figure it out,” he says. “There just is no road map with this group. Not yet, at least.”
Photo courtesy of Descuento Libre