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Groupon, the web-powered group-buying service, says it’s been growing at an exponential rate over the past six months, and expects to end the year with as many as 25 million subscribers and $400 million in gross sales. Groupon COO Rob Solomon also told Advertising Age that the company’s recent promotional campaign for The Gap was so successful that he’s been fielding calls from other national advertisers clamoring to do similar offerings. “We proved that we can drive traffic in spades,” he told the advertising magazine.
The Gap-related Groupon offer let subscribers buy a $50 credit at the store for $25. Solomon said the offer sold 441,000 units for more than $11 million (the company splits the profit on such deals equally with retailers), and Groupon expects that subscribers who sign up for the group-buying offer will spend more than just $50 in the store, meaning The Gap could see as much as $30 million in sales as a result of the promotion. Groupon says redemption rates for its buys are usually over 80 percent.
Solomon also said that in the last five months, the company has ballooned from 3 million subscribers to more than 15 million, and the number of staff working for the service has increased by more than 300 percent to 1,500. Groupon is now available in 29 countries: growth that has come in part via acquisitions, including the recent purchase of competitors in Japan and Russia. Despite its growth, the company — which earlier this year raised a financing round of $135 from Russia’s Digital Sky Technologies and Battery Ventures — says it has no plans to go public any time soon.
While Groupon is growing quickly, so is the competition: LivingSocial, seen as the No. 2 group-buying startup, raised multiple financing rounds earlier this year, and Liz looked at some of the other competitors that have been popping up in various cities since Groupon started to become a powerhouse. Meanwhile, Yelp today announced that it’s started offering local deals on products and services to users of the recommendation service, starting with a series of deals in San Diego.
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