Social Commerce

L'Oréal@Groupon Today | Social Buying Opportunities for 2011

Another large brand went Groupon yesterday – after August’s group-buy deal from logo-challenged Gap (441,ooo Groupons sold on one day on 19 August – about 5% of the total 9.4M Groupons ever sold at that time (commentary)), the cosmetics and beauty giant is using the social commerce platform to promote its subsidiary retail chain, The Body Shop.

Wooing big brands appears to be part of Groupon’s growth strategy, complemented with some new services just announced;

  • An affiliate program (beta-testing) in eBay and Ning
  • A self-serve platform where merchants can set up and run their own Groupon deals

Additionally, Groupon is experimenting with big ticket items – offering corrective-vision surgery for $3,250 (down from $5,000) and $3,500 for a zero-gravity “astronaut experience” inside a jet.  Will all this be enough to sustain Groupon’s growth – the fastest growing company ever; from WordPress blog to $1bn sales in two years – a valuation of $1.35bn, headed up by a Zuck 2.0 CEO, Andrew Mason (expect ‘Attack of the Groupons’ movie to follow on the heels of ‘the social network‘)?

It’s too early to tell whether the Groupon take on local advertising, generating footfall rather than eyeballs with its 15m subscribers, will continue its meteoric rise. Despite questions over whether it makes economic sense to deeply discount in order to generate sales volume, repeat business – the acid test of a good business model – is great; 97% of Groupon customers want to come back for more.  Currently, demand is such that Groupon is having to turn away 7 potential customers for every one it accepts.

But, there is competition – a myriad of competing sites – including the prettier LivingSocial, flash sale sites such as Gilt and Ideeli going local and up-market, Groupon-clone site software widely available to buy (current price $599) and as a service. Like us, TheNextWeb believes future opportunities in social buying include aggregation – sites such as Yipit and DealRadar (LocalOfferNetwork).  But there’s $599 off-the-shelf software for that too.

So we think the future of social buying will lie in specialization, luxury, kids, sports, travel, wine, auto (Mercedes sells cars on Group Buy sites) – and especially B2B – is an early pioneer in this space.  Our recommendation for 2011, watch the B2B social commerce space closely; expect the next Groupon to have a B2B flavor.

You heard it here first.

Budding entrepreneurs, on your marks, set, go…

Chartered psychologist specialising in consumer behaviour, wellbeing and technology. Certified CX professional experienced in Design Thinking. A researcher, writer and speaker, Paul is head of Digital Insight at SYZYGY.

8 Comments Add New Comment

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