Google is a big company, and it earns most of its money with its cash cow, AdWords. But in several key markets, Google hasn't yet fully realized its potential.
One of those: small, local businesses. If there's one thing we've learned from the rise of group buying online, it's that local businesses are eager to acquire new customers, and will go to great lengths in an attempt to do so, sometimes to their own detriment.
Could Groupon be an $8bn a year business? How about a $25bn a year
business? Sound crazy? It's not -- at least to a number of observers,
including TechCrunch's Michael Arrington and TrialPay CEO Alex Rampell.
Group buying is already one of the hottest markets on the internet right
now, and if people like Arrington and Rampell are correct, it could be
one of the largest markets on the internet in short order. No wonder there are rumors about a billion-dollar acquisition of Groupon.
If there's a sexy space on the consumer internet right now, group buying is it. Although there are arguments about whether or not market leader Groupon's first national deal with Gap was really as successful as it appears on the surface, one thing is for sure: companies large and small smell big money in group buying deals.
One of those companies is Yelp, and although it has plenty of competition, Yelp may be one of the few upstarts with the potential to put a dent, even if slight, in Groupon's rise.
Group buying startups have managed to succeed where many .coms have failed before: local. By offering attractive, time-limited deals on goods and services from local vendors, companies like Groupon are proving that local commerce is as big an opportunity online as it has been hyped to be for more than a decade.
But national companies face many of the same challenges local businesses do, and on the surface, there's no reason the group buying model can't work with deals from national brands.
Twitter, which for so long was criticized for its lack of a revenue model, is now firing on all cylinders as it looks to develop multiple sources of revenue. From Promoted Tweets to Promoted Trends, the company is no longer shy about trying to make a buck, and so far, Twitter users don't seem to mind.
One big reason: Twitter has done a pretty good job at making sure its ads aren't intrusive. And if it has its way, it might even make money while making Twitter users happier.
Groupon may be the 800 pound gorilla in the super-hot group buying space, but its prominent success story, coupled with low barriers to entry, has led to a significant amount of competition, both in Groupon's home market, the United States, and globally.
Not surprisingly, Groupon isn't content with its current U.S. dominance. Investors haven't poured nine-figures into the company so that it can maintain its current market position. So it's rapidly expanding internationally to tap into new sources of growth. But expanding beyond a home market almost always comes with challenges and risks, and that's becoming apparent as Groupon tries to move at breakneck speed into far-flung markets.
Yesterday, Sugar Inc., an online publisher focused on women's media,
purchased FreshGuide, a group buying startup similar in nature to
According to Sugar Inc. CEO Brian Sugar, the purchase was a no-brainer for his media company:
"We believe the winning business model for next generation media
companies must include diverse revenue streams...we believe that
FreshGuide will provide local advertisers the ability to advertise to
Sugar's large audience in a high-quality and cost-effective manner."
Launched recently, Keynoir is a new take on the group buying concept, which showcases one offer at a time on high quality restaurants, spas, hotels, and other experiences around London. It has secured a first round of funding worth £1.3m from Index Ventures and PROfounders Capital.
I've been talking to co-founder Glen Drury, previously CEO of Kelkoo, about the concept.
If you run a startup and fancy a Start Me Up profile then please throw your hat in the ring by emailing firstname.lastname@example.org
US group buying site LivingSocial is set to launch its daily deals in the UK in the next few weeks. LivingSocial currently competes with Groupon in most major US cities.
I've been talking to Peter Briffett, UK MD of LivingSocial, about the upcoming launch....
Private sales and group buying are two of the hottest trends in ecommerce today, and two of the hottest companies in these markets are Gilt Groupe and Groupon.
Yesterday, my colleague Meghan Keane wrote about how companies like Gilt Groupe and Groupon were largely avoiding SEO. Somewhat interestingly, however, they're not avoiding paid search.