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Is Group Buying a Fad or a Revolutionary New Local Advertising Vehicle?
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Is Group Buying a Fad or a Revolutionary New Local Advertising Vehicle?

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The group buying phenomenon (also called social buying) has taken the local advertising industry by storm. First launched by Groupon in November 2008, the world has seen the arrival of hundreds of......

The group buying phenomenon (also called social buying) has taken the local advertising industry by storm. First launched by Groupon in November 2008, the world has seen the arrival of hundreds of players in the last 12 months. Venture capital money has been flowing freely in the space. Not to be outdone, Montreal is currently host to three
group buy companies with five more launching in the next few weeks. Is the phenomenon a fad or is this a revolutionary new way to do local advertising?

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  • Thanks Sebastian for doing a presentation on the background of Group Buying/Daily Deals.

    If you're reading this and you're a merchant, you probably want to find out more about how to improve the results of your daily deal campaigns.

    The first presentation that I've uploaded is: http://www.slideshare.net/CouponGuru/using-online-registrations-with-daily-deal-customers

    All the best, Andrea
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  • a quick snapshot of groupon! nice overview!
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  • 1. Is Group Buying a Fad or a Revolutionary New Local Advertising Vehicle?
  • 2. What is Group Buying?
    • Daily offers to buy a local product/service at a deep discount (50-90%).
    • It must be bought in a minimum quantity, otherwise, the seller will not allow the purchase.
    • Comes with conditions and expiration date
    • Close cousin to the coupon industry
    • Also called daily deals, social buying or offers
    Source: some content from Wikipedia
  • 3. How Does it Usually Work?
    • Interested buyers are asked for credit card details, which will be charged only when a required number of buyers registers
    • Intermediaries charge merchants a percentage fee (30% to 50%) of the total value of the whole deal.
    • Limit: once a quarter at most for an individual local advertiser
    Source: some content from Wikipedia
  • 4. What Does it Look Like? Source: http://www.thedinnerdetective.com/colorado/denver/groupon.html
  • 5. Benefits
    • For consumers: bargains!
    • For local advertisers:
      • Brings pre-purchased customers to the door
      • Redemption rate: 90%
      • Demand supply management for small and medium-sized businesses (SMBs)
      • « Customers not clicks »
  • 6. Downside
    • Volume of group buying alternatives to SMBs is overwhelming
    • Can you grow a profitable business by discounting?
    • Deal-driven consumers (do SMBs retain long-term customers?)
    • Are they bought by existing customers?
    • SMBs don’t keep the e-mail addresses
  • 7. Tuangou: Real Origin of Group Buying
    • Originates from China
    • Several people via the internet agree to approach a vendor of a specific product in order to haggle with the proprietor as a group in order to get discounts.
    • The entire group agrees to purchase the same item.
    • The shoppers benefit by paying less, and the business benefits by selling multiple items at once
    Source: some content from Wikipedia
  • 8. North American Ancestor: Mercata
    • Launched in 1999
    • Slogan: "If you're not part of the we-commerce revolution, you're history!"
    • $89M invested
    • Folded in January 2001
    • Ahead of its time
    Source: some content from Webcast: Local Social Commerce - The Explosion of Group Buying
  • 9. Competitive Landscape
    • 120+ players in North America (500+ worldwide)
      • Low barriers to entry
      • Remarkable success
      • Immediately competitive and generating revenue
    Source: some content from Webcast: Local Social Commerce - The Explosion of Group Buying
  • 10. Groupon: The 1000-pound Gorilla
    • Launched November 2008
    • Based in Chicago
    • $170M in VC investments
    • Valuation: $1.35B
    • Estimated 2010 revenues: $350-$500M
    • More than 100 cities
    • 33 million e-mail subscribers
    • Gap: 441,000 deals sold
    Source: some content from Webcast: Local Social Commerce - The Explosion of Group Buying
  • 11. Groupon’s Stratospheric Growth Groupon is on pace to pull in $1 billion in sales, faster than any company in history Source: Forbes
  • 12. In Montréal: 8 Players
    • Tuango
    • Teambuy
    • Steal The Deal
    • LesPac’s Promo du Jour
    • Rabais du Jour
    • Livingsocial
    • I Love MTL
    • iGet.it
  • 13. Tuango.ca
    • http://tuango.ca
    • Based in Montreal
    • Launched in 2010
    • Launching Quebec City in September 2010
    • Seems to be one of the local leaders
  • 14. Teambuy
    • http://www.teambuy.ca
    • Based in Toronto
    • Launched in October 2009
    • In 4 cities (Toronto, Vancouver, Halifax and Montreal), with 3 others coming soon
    • Seems to be one of the local leaders
  • 15. StealTheDeal
    • http://www.stealthedeal.com/Montreal
    • Based in Guelph
    • In 11 Canadian cities
    • Seems to repeat same deals very often
  • 16. LesPac: Promo Du Jour
    • http://www.lespac.com/Promodujour
    • Based in Montreal
    • Owned by Yellow Pages Group
    • Not launched yet
  • 17. Rabais du Jour
    • http://www.rabaisdujour.com
    • Based in Montreal
    • Waiting to get to 2000 subscribers before launching
  • 18. LivingSocial
    • http://livingsocial.com
    • Based in Washington DC
    • In 52+ cities
    • Raised $44M in VC investments
    • Not launched yet in Montreal
  • 19. I Love MTL
    • http://ilovemtl.ca
    • Based in Montreal
    • Not launched yet
  • 20. iGet.it
    • http://iget.it
    • Based in Montreal
    • Not launched yet
    • Positioned as social commerce platform
    • More exclusive/luxury goods?
  • 21. Expecting new players
    • Entry of traditional media brands
      • Gesca
      • Transcontinental (Publisac)
      • Quebecor Media
      • And Groupon!
  • 22. The Future of Group Buying
    • More growth in the space
    • Consolidation and Verticalization
    • Physical goods
    • Integration within traditional media bundle and SEO/SEM
    • Technology providers (GroupCommerce, Close.ly, Offerex)
    • Offer aggregation (Yipit, The DealMap, Aubaines.org)
    • Offer re-selling (Lifesta)
  • 23. Food for thought
    • Not a fad, not revolutionary but definitely game changing and here to stay
    • Perfect in a recessionary environment
    • Gives more power to the consumer
    • Does it cannibalize local media advertising? (newspapers, coupons)
  • 24. Recommended Reading
    • Yipit Blog, http://blog.yipit.com
    • Greg Sterling, http://www.screenwerk.com
    • My blog: http://blogs.praized.com/seb
  • 25. Merci!
    • Sébastien Provencher
    • Co-founder
    • Praized Media
    • [email_address]
    • http://blogs.praized.com/seb
    • http://twitter.com/sebprovencher