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Groupon is winning the clone wars

Groupon winsSince filing its S-1 form earlier this summer, you could say that Groupon has been somewhat scrutinized. Its accounting metrics inspired rampant skepticism and CEO Andrew Mason is making a reputation for himself as something of a lovable-yet-loose canon.

There’s also the fact that Groupon’s business model has been called into question nearly since the company’s launch. While users were fanatically jumping on board with the collective buying scheme, business owners began to notice Groupon had its drawbacks. And as the site has grown, so has vendor criticism. The fact of the matter is agreeing to sell your product for half of its original price and guaranteeing that any customer with a Groupon will get the good for the marked down value isn’t a catch-all, and plenty of businesses suffered.

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Despite the well-publicized drawbacks, the clones came. While there is household name Groupon rival LivingSocial, there is a veritable sea of wannabes: Tippr, Zozi, Town Hog, BuyWithMe, Travelzoo, MarkDown, Google Offers… the list goes on. And when a notable name drops a new deal-a-day site, there are whispers about whether it has an advantage over Groupon. Two stand out from the crowd: Facebook Deals and Google Offers. With their social graphs and Internet domination, both platforms seemed perfectly positioned at least make Groupon nervous.

But the market wariness, controversial quiet period, finger-pointing, and over-saturated market haven’t been enough to let a new rival take Groupon down a notch. This week, Facebook Deals shut its doors, and it isn’t the only site to be experiencing a lack of interest. Bloomberg reports that Yelp is cutting its deals salesforce team in half and moving focus elsewhere. Deals won’t disappear from the site entirely, but it’s certainly not inspiring.

“Rather than offer more and more deals of inherently declining quality to more and more folks over time, we want to make sure we’re only providing good, quality opportunities,” VP of corporate communications Vince Sollitto says. “While we think the deals business is a good one, it has never been a core focus of our offering.”

Facebook had a similar reason behind its Deals shut down. “After testing Deals for four months, we’ve decided to end our Deals product in the coming weeks. We think there is a lot of power in a social approach to driving people into local business. We remain committed to building products to help local businesses connect with people, like Ads, Pages, Sponsored Stories, and Check-in Deals,” a spokesperson told us.

The fact that Facebook and Yelp are hampering their deal-a-day efforts is good news for Groupon—and not because it means this market space is a little less crowded. Both companies seems well-position to give this business model a go, Facebook with its infinite user base, social presence, and business pages, and Yelp with its intense focus and relationships with local business.

Daily deals researcher and associate professor at Rice University Utpal Dholakia thinks Groupon’s veteran status works in its favor. “I think Groupon has an incumbent’s advantage on both sides of the transaction. On the consumer side, it has significantly higher awareness and usage rates among consumers in virtually all markets it operates in when compared to its competitors,” he says. “On the merchant side, merchants are much more comfortable with it and know what to expect based on their own previous experiences and those of others in the market. In line with this, I have heard from multiple other Groupon clones that they are having difficulty recruiting merchants to run offers on their sites. I expect this trend only to continue.”

It’s starting to look as if—despite the rabid jumping-on-board—a daily deals scheme isn’t something anyone can do. Everyone is certainly trying, from Amazon to the New York Times, and thus far the only site that can challenge Groupon appears to be LivingSocial. So this unproven business model that has gotten Groupon loads of flak might actually be something few can make work, and even fewer can make profitable. 

Yipit co-founder James Moran thinks it’s too early to tell. Yipit tracks the industry, and Moran says it aggregates more than 30,000 offers per month. “I wouldn’t say Groupon’s competition is falling off. Most of the closures are smaller sites who have realized that scaling these businesses into huge companies is harder than they think.” He says that the real challengers are experiencing more and more success, and it’s eating at Groupon’s profits. “Groupon and LivingSocial’s market share was north of 90-percent in major US markets a year ago… [now] their combined share is down to 70-percent. Much of the fragmentation is being driven by gains by up-and-comers like Travelzoo, Bloomspot, Gilt City, and BuyWithMe.”

It would be premature to say it’s all smooth sailing from here for Groupon, and what it likely has to worry about most is that smaller clones will eat at its numbers–that and speculation we may be witnessing the beginning of the end of the daily deals era. But if it can continue to thwart efforts like we saw this week, it could somewhat shed its reputation as an investment risk.

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Gift your unused Groupons with Presentify.me
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There are plenty of places to turn to when you want to shed your old Groupons. Sites like DealsGoRound and CoupRecoup have become the Black Market of the daily deals industry, giving consumers a place to profit off their less impressive purchases. But a new site is spinning that into a holiday appropriate idea that puts Grouponicus to shame.
Presentify.me takes your unused Groupons and LivingSocial discounts and pretties them up into gift cards for friends and family. While you can certainly pawn these off without the presentation, that makes it more like an afterthought than a present. But Presentify.me, which is still in beta, creates gorgeous and more formal cards that will keep you from simply printing a coupon out and stuffing it in an envelope.
Daily deal sites are trying to get on the holiday shopping bandwagon with discounted products and prompts telling users to buy experiences as gifts. And while there are plenty out there that would make any recipient happy, the presentation definitely leaves something to be desired. At the moment, Presentify.me is free and working on adding to its current repertoire of three designs. But given the larger discount-a-day sites out there that are trying to make a bid for gifting dollars, and Presentify.me’s initial buzz, we wouldn’t be terribly surprised if the likes of Groupon and LivingSocial were looking into integrating a service like this. 
 

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How to use social media and save on Small Business Saturday
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Between Black Friday, Cyber Monday, and the unending onslaught of online deals, there is another holiday shopping day that might get lost in the shuffle: Small Business Saturday. This year marks the second annual such event, a new tradition that tries to steal some addition from chain retailers and big e-commerce sites and give it to local vendors.
And this year, the fledging ritual is getting some serious attention from social media sites. Facebook, Twitter, and Google have all pledge their efforts in support, offering and encouraging small business owners to use their sites’ tools to promote shopping this weekend.
Local retailers aren’t the only ones who stand to benefit this weekend. What happens to consumers who want the discounts but sans the chain names (that are sometimes attached to controversy) they go hand in hand with? Small business Saturday can fill that void along with the help of some geo-social applications.
Foursquare
Foursquare has been at the top of the social-meets-location game since it began, and Small Business Saturday will be no exception. If you have an American Express card, sync it to your Foursquare account following these directions. Then when you check-in to shops who have partnered with the service via Foursquare on Saturday, you will see a button that says “load to card.” Then when you spend at least $25 or more at the participating store, you’ll get a notification saying $25 was credited to your Amex account. American Express is a sponsor of Small Business Saturday, so ratcheting up sales is in its best interest, but turns out they’re willing to compensate you for helping make the event a success.
Etsy
The purveyor of all things handcrafted is a natural fit for small business Saturday—and will appeal to those who want to buy “local” without leaving their living rooms. Just searching “Small Business Saturday” on the site brought up a slew of items that will be on sale this weekend, and this blog catalogued some of the best e-shops on the site that offered discounts last year.
Daily deal sites
While the likes of LivingSocial and Groupon tend to offer food and spa deals, the occasional local retailer pops up. Between now and Small Business Saturday, a minimal amount of homework and creating an account with one (or all) of these sites could save you some Monday. We'd advise getting with something like The Dealmix, which collects a large variety of all these local deals. Keep an eye out on any of these applications for vendor or shop deals in your area. Then make a call or check Facebook to see if they are participating in Small Business Saturday. Then add those savings to whatever discount the daily deal site was offering. Of course, you should check that you can use coupons during the Saturday sale.
Facebook
Facebook is offering a slew of tools for small businesses to take advantage of, but the site is also catering to consumers. Check out the Small Business Saturday Facebook page and you’ll have access to a variety of information, including city guides for optimizing your local shopping in New York, Chicago, and San Francisco, as well as organized events in cities nationwide. Some of them include raffles, free gift wrapping, Santa visits for the kids, and community breakfasts.
Twitter
Be sure to follow your favorite local business on Twitter, if you haven’t already. We’re sure a great many of these sites will have implemented a Follow button (one of the tools in the Small Business Saturday kid), and will be using the hashtags #ShopSmall, #ShopSmallNov26, #SmallBizSaturday and #SmallBusinessSaturday to spread word of their discounts this weekend. 

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Groupon and other Daily Deal sites aim for larger holiday shopping share
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We've already seen examples of holiday shopping getting out of control; some of you perhaps facing said craziness first-hand. This year, more people are planning on hassle-free shopping online than in the past, and Daily Deals sites are planning on grabbing a good portion of that traffic by pumping out scores of more offers than last season.
Groupon has returned with another round of its Wintertime celebration Grouponicus, where Groupo the Deal Bird brings magical stacks of Groupons to the true believers. Grouponicus comes to an expanded 41 cities (compared to last year's 15) and will be offering new “Epic Deals” such as backstage tours of the Ellen DeGeneres show or cooking lessons from chef Todd English. The site also makes it more convenient to send offers to friends, noting list price not the price paid for gifts.
LivingSocial announced it would be offering half-off deals for Black Friday with 20 national retailers, including Verizon Wireless, Electronic Arts, Office Max and Sketchers. LivingSocial says that Cyber Monday will bring a whole new batch of similar deals from the same retailers. The company is also offering new holiday gift boxes which contain four themed local events and a voucher to use at one of the options.
Cyber Monday deal hunters should also be aware of Rue La La's series of sales renewing at 11 a.m. Every morning until Cyber Monday. The flash sales shopping site, Gilt Groupe, will be offering new sales launches every three hours come Monday, and is throwing in free shipping on all purchases.
Despite the sharp 35% fall in Groupon's stock Wednesday, a survey from LinkShare points out that people still want daily deals. Out of 1000 surveyed, 56% said they'd buy from unknown brands if presented with the right deal at the right time. Daily deal sites are supposedly looking at a $100 million in holiday coupon sales this year according to an estimate from the Yipit deal aggregation site.
Via Washington Post
 

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