Beyond Groupon: Other Players In The Daily Deals Space To Watch

Woman running with shopping bag

OK, Groupon now has its exit plan. Who else in the daily-deals world is creating momentum?

It’s increasingly big business — daily-deal sites are expected to generate $2.7 billion in revenue this year, and BIA/Kelsey estimates the market could reach $4 billion by 2015. But it’s also become an extremely crowded business, as everybody and their brother has rushed to roll out a daily deals product. Here’s our list of sites to watch.

Living Social

(group buying*)
Basics: Founded in 2007 by Tim O’Shaughnessy, Eddie Frederick, and Aaron Batalion. Based in Washington, DC.
Funding: Over $632 million so far. Investors include Amazon (NSDQ: AMZN), Steve Case, Grotech Ventures, US, Lightspeed, Revolution, and T. Rowe Price. The latest venture round, in April, raised $400 million.
Reach: 28 million subscribers. 8.76 million visitors in April.
Comment: After Groupon, the biggest player in the daily-deal space; widely believed to be the next IPO contender. A January deal for a $20 Amazon gift card for $10 generated around $13 million in sales, surpassing Groupon’s largest deal (with the Gap, in August 2010).

Gilt Groupe

(private sales and group buying)
Basics: Founded in 2007 by Kevin Ryan, Alexis Maybank, and Alexandra Wilkis Wilson. Based in New York, NY.
Funding: $240 million so far, including $138 million in the most recent round. Investors include Softbank Group, General Atlantic, Matrix, Goldman Sachs, New Enterprise Associates, Draper Fisher Jurvetson Growth, Pinnacle, TriplePoint, and Eastward. Company valued at $1 billion in May 2011.
Reach: 721,000 unique visitors in April.
Comment: Sales on men’s, women’s, and children’s apparel; travel; gourmet food. Gilt City offers daily deals. Plans to launch a full-price men’s online retail store. Also launched Gilt Groupe Japan in 2009, which now has over 600,000 members. CEO Ryan said the company is considering an IPO in 2012.

Ideeli

(private sales and group buying)
Basics: Founded in 2007 by Paul Hurley. Headquartered in New York.
Funding: $64.8 million, including $41 million in a Series C round in April 2011. Investors include Kodiak Venture Partners, Constellation, StarVest, Next World, and Cue Ball.
Reach: 4 million members. 540,000 unique visitors in April.
Comment: Ideeli says it’s on track to bring in $250 million in revenue this year. The site originally focused on fashion and is now expanding into travel and daily deals.

DealFind

(group buying)
History: Founded in 2010 by Gary Lipovetsky and Michael Tulman. Based in Toronto.
Funding: $31 million from Insight Venture Partners, Georgian Partners, and Ontario Venture Capital Fund.
Reach: 28 cities in Canada and 40 in the U.S.
Comment: Largest daily deal site in Canada. Plans to expand to 100 cities in North America by the end of 2011.

One Kings Lane

(private sales)
History: Founded by Susan Feldman and Alison Pincus in 2009. CEO is Doug Lane, who previously ran the Photoshop and Flash video businesses at Adobe (NSDQ: ADBE) and was the cofounder of Goodhome.com.
Funding: Raised $23 million in February 2011 from Kleiner Perkins Caufield & Byers, Greylock Partners, First Round Capital, TriplePoint Capital, LinkedIn’s Reid Hoffman, and Google’s Marissa Mayer. The company says it grew 500 percent in 2010.
Comment: Sales on housewares, home decor, and furniture. Bought publishing design firm Helicopter in January 2011. Co-founder Pincus’s husband is Mark Pincus, CEO of Zynga.

BuyWithMe

(group buying)
Basics: Founded in 2009 by Andrew Moss. Based in New York.
Funding: $21.5 million. Investors include Matrix Partners and Bain.
Reach: 13 cities.
Comment: BuyWithMe bought Chicago’s DealADayOnline and San Francisco’s Groop Swoop in May 2011 and says it will double the number of cities it’s operating in by the end of this year.

Beyond the Rack

(private sales)
Basics: Founded in 2009. Based in Montreal.
Funding: $17 million. Investors include Highland Capital Partners and BDC Venture Capital.
Reach: 3.8 million members.
Comment: Apparel, accessories, beauty, home decor.

Bloomspot

(group buying)
History: Founded in January 2010 by former Yahoo! (NSDQ: YHOO) execs Jasper Malcolmson and Ashish Baldua.
Funding: $11.1 million from True, Harrison Metal, Jeff Weiner, Erik Blachford, Brad Garlinghouse, Menlo.
Reach: 11 cities.
Comment: Deals on luxury hotels, restaurants, and spas; focus on weekend getaways.

zozi

(group buying)
History: Founded by TJ Sassani in 2009. Based in San Francisco.
Funding: $10 million. Investors include 500 Startups, LaunchCapital, ZIG, Global Brain, Thomas Lehrman, Peter Lehrman, David Dolby, Eric Stein, Larry Bock, David Tisch.
Reach: 62 cities in the U.S. and Canada.
Comment: Focus on local adventure activities.

Notes:

* We included both daily-deals sites and private-sale sites on this list, and specified which was which after each. (“Private sales” sites offer limited-time sales for members only. “Group buying” sites work with small businesses — and sometimes also national ones — to offer subscribers local deals.)

Some daily deal sites have been acquired recently, so we didn’t include them in the above list. GSI Commerce bought Rue La La in 2009; Amazon bought Woot for $110 million in 2010; and Nordstrom bought HauteLook for $180 million this past February.

Sources used to compile this list:
* CrunchBase.
* LivingSocial, Gilt, and Ideeli traffic numbers are provided by Comscore.
* Thanks to Comscore (NSDQ: SCOR), BIA/Kelsey, and Hitwise for their assistance.

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