Why Groupon Will Crush Most Group-Buying ClonesMany pundits lately have decried the Groupon model as easy to emulate. They've also said that Groupon doesn't really grow customer loyalty for the businesses that use it, and that fierce competition with other deal sites would result in price wars and a race to the bottom in terms of commissions. Merchants were also getting more savvy about how they used group-buying sites.

I was one of the pundits who believed these things. I don't anymore. In fact, now I'm fairly sure Groupon and a handful of other bigger players will be increasingly difficult to beat or catch, and they may now have developed a sustainable barrier to entry for new competitors. That could be driving the latest rumors that Groupon will actually get a $2 billion to $3 billion valuation in its next funding round.

Here's why I changed my mind. I've spoken to a few restaurateurs around San Francisco, and they're sick of getting pitched by deal sites. So sick, in fact, that many of them have hung up the phone on sales pitches from group deal sites. Restaurants are the most prized offerings for group-buying, and they tend to elicit the most regular response, which makes them, in effect, the canary in the group-buying coal mine. These folks told me they are now seeking two things: first, a rough guarantee that a deal they agree to will drive decent traffic; second, the ability to meter the traffic and put a ceiling on the number of offers sold. No more nasty surprises, thank you very much, they say.

That second point is no problem for any new startup daily-deal site to handle, but the first one can be quite difficult. So, if restaurants are finding that signing up with a new deal site is too much of a hassle, and if they want performance guarantees that only the established players can provide, then you have a built-in barrier to entry that is somewhat sustainable. Additionally, Groupon and LivingSocial have essentially bought out advertising inventory and keywords for large swathes of the online universe, making new customer acquisition via advertising very spendy: It's now much harder and much more expensive for yet another group buying site to build a decent email list.

Getting customers to sign up for yet another group buying site is hard in the same way that getting customers to sign up for yet another email newsletter is. At some point, who needs it? And without a decent initial subscriber list, it's difficult to get high-quality deals. In other words, you've got something of a group-buying deal lockout emerging, with top players looking like they will control a large share of the market.

Some niche sites will find traction by gaining subscribers interested in more targeted deals and avoiding the noise. Aggregators like Yipit.com and 8Coupons.com will level the playing field somewhat and make group buying more like regular online coupon clipping. But in the meantime, the next time someone says that anyone can start a Groupon clone, ask them to nail down 10 restaurant deals with no subscriber list, and then come talk to you.

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Sapna Mishra

Thanks for sharing this informative content.. Groupon is one of the best daily deal website and provides quality services to users. So, Many group buying clones came in this segment market New group buying clones have more struggle to survive in this competitive market. But it is not impossible, I have an idea that if one creates website clone for a niche market will help to survive or this clone must have large budget to improve services such as distribution and customer support.

May 07 2013 at 2:25 AM Report abuse rate up rate down Reply
Dhiya Maharajan

If you're looking for a more complete list of Groupon clone, You can see this website which you gives more proviledge http://grouponclone.contussupport.com

August 18 2011 at 8:40 AM Report abuse rate up rate down Reply

IMO, Groupon is oLD technology http://www.peoplestringadwise.info/ New sites are coming that allows you to receive deals on phone, sms, email, and social networks all at once

April 25 2011 at 8:54 PM Report abuse rate up rate down Reply

If you're looking for a more complete list of Groupon clones, LocalDealSites.com lists over 130 Groupon-like daily deal websites and lets you filter by city so you can see which sites have offers in your area. http://www.localdealsites.com/

December 18 2010 at 1:10 AM Report abuse rate up rate down Reply

When entering into the group buying craze, remember one thing: don't get attracted easily to deals that are so exciting, instead, be vigilant enough to investigate and inquire other people first about the deal you want to purchase. One website which can contribute to your enquiries and also help you save time on looking through relevant deals is GroupBuyUnited.com. This website lists daily deals from GroupOn, LivingSocial, and other reliable deal sites.:-)

November 18 2010 at 4:57 PM Report abuse rate up rate down Reply
Think positive!

Remember my space? Groupon is the my space of the group buying segment. There are others that have solved the problems Groupon can't solve (because of its business model and valuation). Give them time. By the way, thanks Groupon for creating a whole new generation of want-a-be entreprenuers.

November 17 2010 at 12:08 PM Report abuse rate up rate down Reply

my experience with Groupon was entirely negative. Even though the credit card company acknowledged my card by approving the $1 "text charge" they declined it. There is exxentially no customer service at all on weekends. On Monday I got a call back from my weekend report, but was told the the offer had expired. I withdrew from groupon, and told them I would recommend against anyone joining. Consider this a partial fulfillment of that promise.

November 17 2010 at 9:19 AM Report abuse rate up rate down Reply

The real point of this article should be that brand and distribution matter. To the first point groupon has a great brand but so does facebook, yahoo, aol, microsoft and to the second point, there are many existing publishers that are not yet in the deal space who could deliver even greater distribution than groupon does. at the end of the day, the only way to guarantee a merchant that you can drive a guaranteed number of customers to their store is to have the ability to promote their deal across a large publisher or group of publishers - in other words, a distribution platform. Adility.com will create that platform. courtney cofounder & CRO, Adility

November 16 2010 at 12:33 PM Report abuse rate up rate down Reply

Group-buying and daily deal sites can be a great way to save as long as you do your research and don't buy impulsively. Waiting for the best deal to come along is important. A great site to use to get the best deals and sales in your area from a variety of daily deal sites is http://www.dailydealpool.com. They'll email you daily with the best buys, ensuring you won't miss out.

November 16 2010 at 10:25 AM Report abuse -1 rate up rate down Reply