What is ‘Groupon Now’? Local Hourly Deals Go Mobile
Getting small businesses to spend money on advertising is hard work. Since its launch in 2008, Groupon has built a multi-billion dollar business doing it. However, despite the media and business success-stories, many small businesses and customer have surfaced detailed horror stories. Victims of their own group-selling success, some small business owners are no longer interested in daily deals.
Bad Groupon stories can go something like this: A local pizzaria posts a daily deal, happy to take a reduced margin to bring in new customers. No guarantees if they will ever come back, but they’ll come once. The up-side? Landing a Groupon deal, even at a loss, can put a small business on the map. (These days 98% of Groupon deals tip.) In this case, hundreds of customers stream in for pizza, wielding their Groupon vouchers, complaining about slow service and demanding exceptions to the small print. The restaurant management finds itself overwhelmed and understaffed. No one is happy, least of which is the local restauranteur nor the regulars who happen to pop in to their local during a daily deal.
Today, Groupon boasts over 80 million subscribers and despite a loss of over $400 million last year and a continued onslaut of Groupons turned ‘bad-ons’ for local merchants and service providers, we can all expect an exciting IPO coming soon.
What is Groupon Now? Groupon copy cats and established statup like Foursquare as well as big brands like AmEx are getting in the daily deal game. Every major newspaper or owner of a mailing list is working daily deals. To stave off the unwashed latecomers the company recently launched Groupon Now: hourly local deals in about 25 cities. Perfect for leveraging the mobile customer experience.
How does Groupon Now work for Mobile? Unlike regular daily deals, purchased for future use, ‘Groupon Now’ deals are redeemed immediately via web or mobile. Customers only pay if they use the deal and merchants can manage their business in real time. On days when business is slow, a merchant can create a deal to be redeemed by a customer immediately. Local businesses may be less afraid of it because they can shut it off quickly if they need to.
The mobile model seems to resolve a list of problems with the Groupon daily deal model for both small business owners and service providers. In the scenario below, Jodi missed her regular yoga class, but still feels like a workout. She’s already out and about with her gear so she uses her mobile phone to find a workout deal in her postal code. Jodi finds 7 fitness deals, each for a particular class time. She selects the one that works best for her and buys it up via mobile. Voila. If Jodi’s not able to use the deal, no need to sell it to friends or login to a deal swap site to unload it. It’s automatically refunded.
Pretty compelling but what does this model do for loyalty if traffic is not necessarily profitable traffic? Will people come back at regular price or simply wait for another deal? In essence, the lack of loyalty is baked-in to the Groupon model. Because if you were loyal, you’re not going to buy another deal are you?
However for big corporations getting into the mobile moment-by-moment deal game, like The Gap and AmEx it’s a different story which I’ll attempt to cover in my next post. Until then, add your thoughts and comments.
Read more? Here are a few articles to discover…
Why Groupon Is Poised For Collapse, An in-depth series looking at the daily deal industry written by Rocky Agrawal, an entrepreneur who has worked on local products since 1995; TechCrunch dated June 13th, 2011 http://tcrn.ch/riXi3n
Meet The Fastest Growing Company Ever, written by Christopher Steiner, Forbes Magazine dated August 30, 2010, http://onforb.es/qjU2tp
A look at how daily deal sites work, The Associated Press, published Jul. 20, 201 http://bit.ly/mUAA3A
American Express flexes its muscles in local deals market, Ryan Kim, GigaOm, June 20, 2011 http://reut.rs/og32qt