Google’s $US6b Groupon deal has local echoes

ABOVE: A typical Groupon deal.

Reports have Google on the verge of buying deal site Groupon.com for megabucks. That’s good news for two local sites working a similar model – one of which is rumoured to be close to its own sale.

Reports on The New York Times' Dealbook blog, and the Wall Street Journal’s All Things D, have Google close to buying deal site Groupon.com for a staggering $US5.3 billion, plus a $US700 million earn-out.

Groupon is reportedly bringing in around $US50 million a month in revenue though its deal-of-the-day model.

READ ALSO: Trade Me now worth $1.62 billion – and Sam’s okay with that

Its much-imitated model offers a featured product at a steep discount – but the discount only kicks in if enough people (say, 100) commit to buying the product.

Coupons are then generated that can be used with a local merchant.

It’s a model designed to turn wannabe-buyers into viral marketers, bugging their friends to come in on the deal too. All such sites feature one-click options to alert (or annoy) your friends on Facebook and Twitter.

Kiwi contenders
There are two local sites that (cough) pay homage to Groupon – Groupy.co.nz, and Grabone.co.nz (which, like its sister site Sella.co.nz enjoys backing from Herald publisher APN - which holds a 50% in Grab One's holding company; Mr Bradley owns the other half).

Enterpreneur Lance Wiggs, who holds a 10% stake in Groupy, is naturally positive about the deal, but notes:

“It's a very different for Google, because while it’s web-based for the customer, the business requires teams of sales people on the ground in each target market.

“A deal would be validation of what is increasingly seen as a more effective way to advertise for small and medium service businesses. It would also be useful for

Google to add its own advertising products to the portfolio of that sales team.”

The rumour mill has Groupy negotiating its own sale, with a domestic buyer.

Grabone: expanding across the ditch
Grabone founder Shane Bradley told NBR it would be great if Google bought Groupon.

“It really means that they see this as a long term business model.”

Mr Bradley said Grabone had just launched in Brisbane, and planned to expand into the rest of Australia.

The site now had 40 staff, and was adding two a week.

It had sold 330,000 coupons since its July launch, Mr Bradley said, and gained around 60,000 Facebook fans.

Mr Wiggs declined to provide any sales or traffic figures, but did point to Groupy's past sales, which are listed on the site here.

1Day.co.nz, which rode the original deal-of-the-day site boom, has also now launched a Groupon-style sin-off, called 1-DayOut.co.nz.

NBR understands that while its coupon sales, since its August launch, are just over the 50,000 mark.

4
Login in or Register to view & post comments