Social buying success at Groupon
The daily deal site launched in 2008, but has recently gone global to more than 150 cities. Direct Marketing News speaks with the company's president and COO, Rob Solomon.
Q: What are the biggest changes in the industries Groupon works with?
A: Small businesses used to rely on the Yellow Pages and newspapers for lots of solutions that didn't really work for them. We are trying to create a whole new market. If you think about e-commerce, it's a gigantic category yet it is only about 6% of overall commerce. The other 94% happens in the real world. That is what we are addressing; we are helping small businesses sell things on the Internet — something they were never able to do with any kind of scale.
Q: What are the biggest changes you've seen recently in e-commerce? Was it the recession's impact?
A: I don't want to say we're recession-proof. I think we're probably counter-cyclical, meaning the savings we provide are good for consumers and that turns them into customers for small businesses. In the middle of this slowdown, we've created a new market, which enables e-commerce for local businesses.
Q: Is a recession really a boom time for coupons and deals?
A: This year we will probably do 10 times more in revenue than we did last year. We are helping consumers find the best local businesses at a discount. I think they [the recession and growing business] are related, but what we really are is more of a local discovery guide where consumers are finding the best things to do in their area, and it just happens to be at a discount. We are helping them discover great stuff, and the fact that it's at a discount drives great conversion.
Q: How do you use social media?
A: The nature of Groupon is pretty interesting. It's a collective buying service at its essence, so in order for a great deal to kick in, a certain threshold of buyers have to connect. We are finding people are talking about an amazing nail salon or an amazing restaurant, and they are posting about it on their Facebook updates or on Twitter, and that is helping to drive more people to buy the Groupon.
A lot of companies have done marketing campaigns about shopping in your underwear or shopping naked, and that's what e-commerce is — it's a very antisocial activity. Going to a restaurant or going to an architectural tour or a paintball Groupon are all very social activities.
The social networks are facilitating the viral spread of some of our offers, and people are recruiting other people to partake in them.
Q: What's your prediction for mobile couponing and offers?A: I think a lot of start-ups will go after that. I think it makes the most sense as a combination of mobility in real time and things going on locally. I think it's going to be evolutionary growth, but I don't think you're going to see revolutionary growth in mobile coupons. It's just waiting for the right product and the right delivery methods. It's happening, and people are testing, and it will be a big area, for sure, in the next few years.