July 22nd, 2010
How to Compete with Groupon et all
Groupon, Buy With Me, Living Social- they all have strong growing user bases and advertisers/merchants supplying them with offers. So how will the burgeoning set of upstarts compete with the big boys who have such a head of steam? Maybe they can’t if they try and go after them head on.
There are several ways to skin a cat. There is no supply side driven piece of the market, sure big players will draw in advertisers but where is the self serve for merchants? Building a simple bidded market for social shopping offers that is geo-centric would produce a steady stream of high quality offers with maximum user value. Allowing merchants to up their offer, lower their price or overall increase the value to consumers is a no brainier- let the best deals rise to the top. Plus it would allow for easy replication across all cities and towns with minimal sales overhead cost- that money would go to marketing to merchants, but once a city is established those costs can be taken out and applied to new markets.
The second part is to aggregate all the small and mid-sized sites and supply them with deals thus delivering huge volume for advertisers as well as a virtual sales team for sites. There is a reason online publishers use ad networks to supplement their sales. Social shopping should do the same. Roll up remnant inventory in the social shopping space: provide deals in cities not currently served by sites and augment existing cities with more/better deals. End of the day you’ve built a massive distribution engine as well as deal engine but with diversification- and maybe bigger than any single site.
