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"I often find myself wishing that the original deal-a-day version of Groupon was around today; looking at the other paid options available to me as a small loca

by crabasa 11y ago

"I often find myself wishing that the original deal-a-day version of Groupon was around today; looking at the other paid options available to me as a small local business owner, I can’t imagine a lower risk, more cost effective, or higher impact way than having Groupon send a one-time offer to 500k people in the Bay Area about Detour, with a few thousand of them buying it for half off." Daily deals cannot scale and Andrew knows this better than anyone. When you're small you can price daily deals in a way that works for SMBs and your bottom line. But when you're huge, you only have 365 deals per year and the price you need to charge is out of reach for small businesses. You have effectively equaled the reach of a traditional media company.

jacquesm 11y ago
Daily local deals?
- crabasa 11y ago
  Yes, daily local deals. Mason was wishing for some version of Groupon that would affordably deliver 500k emails to people in SF for his local business Detour. Such a thing does not and cannot exist.
  - jon-wood 11y ago
    Sure it can. It may not be a startup with a billion dollar valuation, but not every company has to be. You could probably make a pretty good living off something like that, especially if you can scale it to several local areas.
    - notahacker 11y ago
      500k signups in an area is a lot to ask for, especially if your daily deal email doesn't have an interesting range of products like all the other daily deal emails...
rahimnathwani 11y ago
Using Detour as an example of a local business is disingenuous. Detour's marginal cost per customer/tour is ~zero. The businesses that Groupon targets are mostly those delivering a physical good/service, like food or a massage. Those require materials and/or human effort, which are more expensive than bandwidth and electricity.
andrew 11y ago
Here's a quick history of the evolution of the Groupon model. Groupon started out as one deal a day. We had a massive waiting list from merchants - 9 months, at one point. With so much merchant demand and Groupon only running one deal a day, clones started to appear. Instead of waiting to be featured on Groupon, merchants ran with the clones. Most customers didn't really care whether they bought from Groupon or its clones. So we realized what in effect was happening was that the model was moving to a marketplace... just one that was distributed across multiple sites. We decided if the inventory was going to exist, it would be better on Groupon than spread across a zillion clones, so we moved to a marketplace model. In other words it was mostly competition in a fairly commoditized space, and not scalability issues, that drove us to the marketplace. That's not to say that scalability wouldn't have been a challenge with a daily deal model, but there are things you can do. A lot of the needs in the space actually balance out nicely. Some merchants want 20k customers, others want 20. Most merchants prefer new customers, some are indifferent. Both customers and merchants want category diversity so Groupon remains interesting and non-cannibalistic. In theory you can get all those things with smart segmentation and personalization. We experimented with that in the transition to marketplace but ultimately went ahead with moving to the "many deals" (which in the short term, is exactly what customers want) to stay ahead in the brutal competition for marketshare. Hard to say whether I'd do that part differently today... if we'd been less focused on maintaining marketshare NYTimes might have just written the obituary for Groupon instead of Livingsocial.
- crabasa 11y ago
  Respectfully, I don't buy it and I think the the marketplace is bearing this out. Local advertising was temporarily disrupted when Groupon owned the market (eyeballs) and offered a product that businesses thought was superior to traditional forms of local advertising. Once competition fragmented the market and businesses realized that 50% off coupons attracted bargain hunters rather than loyal customers, there wasn't any going back.

by crabasa 11y ago

jacquesm 11y ago

Daily local deals?

crabasa 11y ago
Yes, daily local deals. Mason was wishing for some version of Groupon that would affordably deliver 500k emails to people in SF for his local business Detour. Such a thing does not and cannot exist.
- jon-wood 11y ago
  Sure it can. It may not be a startup with a billion dollar valuation, but not every company has to be. You could probably make a pretty good living off something like that, especially if you can scale it to several local areas.
  - notahacker 11y ago
    500k signups in an area is a lot to ask for, especially if your daily deal email doesn't have an interesting range of products like all the other daily deal emails...

rahimnathwani 11y ago

Using Detour as an example of a local business is disingenuous. Detour's marginal cost per customer/tour is ~zero. The businesses that Groupon targets are mostly those delivering a physical good/service, like food or a massage. Those require materials and/or human effort, which are more expensive than bandwidth and electricity.

andrew 11y ago

Here's a quick history of the evolution of the Groupon model. Groupon started out as one deal a day. We had a massive waiting list from merchants - 9 months, at one point. With so much merchant demand and Groupon only running one deal a day, clones started to appear. Instead of waiting to be featured on Groupon, merchants ran with the clones. Most customers didn't really care whether they bought from Groupon or its clones. So we realized what in effect was happening was that the model was moving to a marketplace... just one that was distributed across multiple sites. We decided if the inventory was going to exist, it would be better on Groupon than spread across a zillion clones, so we moved to a marketplace model. In other words it was mostly competition in a fairly commoditized space, and not scalability issues, that drove us to the marketplace. That's not to say that scalability wouldn't have been a challenge with a daily deal model, but there are things you can do. A lot of the needs in the space actually balance out nicely. Some merchants want 20k customers, others want 20. Most merchants prefer new customers, some are indifferent. Both customers and merchants want category diversity so Groupon remains interesting and non-cannibalistic. In theory you can get all those things with smart segmentation and personalization. We experimented with that in the transition to marketplace but ultimately went ahead with moving to the "many deals" (which in the short term, is exactly what customers want) to stay ahead in the brutal competition for marketshare. Hard to say whether I'd do that part differently today... if we'd been less focused on maintaining marketshare NYTimes might have just written the obituary for Groupon instead of Livingsocial.

crabasa 11y ago
Respectfully, I don't buy it and I think the the marketplace is bearing this out. Local advertising was temporarily disrupted when Groupon owned the market (eyeballs) and offered a product that businesses thought was superior to traditional forms of local advertising. Once competition fragmented the market and businesses realized that 50% off coupons attracted bargain hunters rather than loyal customers, there wasn't any going back.