Despite Groupon’s basic stranglehold on the group-buying space, David Payne thinks it’s vulnerable.
The co-founder of battling startup Scoutmob said Groupon’s margins aren’t acceptable and feels he has a bigger band-aid for deal-crazy consumers and businesses.
“When bodies attending at this amplitude they see it as a zero-sum game,” said Payne, who has heard all the naysayers back ablution his Atlanta-based aggregation aftermost year. “They see it as Groupon’s aloft a billion dollars in clandestine basic and some (other) companies accept aloft one, or ten or twenty (million)… how can they compete?”
Payne said the group-buying, or “local,” amplitude is ample abundant to board newcomers such as Scoutmob, DailyCandy, Gilt City, SCVNGR, GroupPrice and others. He added that Scoutmob is allotment of this “next wave” of accord sites that are afterward in Groupon’s colossal footsteps and alteration the business archetypal to bigger clothing their clients.
“I anticipate what’s accident is that Groupon started acceptance bounded merchants to absolutely monetize and drive cartage in a assessable way and that was a babyish footfall into article abundant larger,” said Payne, whose account uses Groupon-type deals, but makes them chargeless to consumers and accuse business owners $2 per adapted customer, compared to the 50-percent cut taken by Groupon (on a archetypal $25-for-$50-worth-of-food coupon, Groupon pockets $12.50).
Scoutmob works primarily as a chargeless adaptable app on an iPhone or Android device. Users browse deals by burghal (currently accessible in Atlanta, New York and San Francisco) or adjacency and again redeem the basic advertisement back they access at the business, aloof as they would do at a bar application Foursquare. An balance is issued to the business for every accepted check-in.
Its 500,000 users anemic in allegory with Groupon’s 70 actor or with Living Social’s 26 million, but Payne said Scoutmob is at atomic acceleration its user abject every six months and projects hitting 1.5 actor by year end.
To reinforce that goal, Scoutmob appear today it has anchored its aboriginal allotment annular of $1.5 actor from adventure basic close New Atlantic Ventures. The money will be acclimated to amateur Scoutmob’s 25-person agents and accompany the discounting account to 10 added cities: Austin, Boston, Chicago, Los Angeles, Seattle, Portland, Washington, Dallas, Denver and Nashville.
“Obviously this is a actual active amplitude in the bazaar with a lot of copycats,” said Thanasis Delistathis, co-founder and managing accomplice of New Atlantic Ventures, abacus his close does about 5-6 deals anniversary year. “We’re of the assessment that over time, the margins in the Groupon-Living Social archetypal will accept to appear bottomward because they aren’t sustainable.”
Chicago-based Groupon, which aloft $950 actor in January and has been reportedly admired at $25 billion, generated added than $760 actor in 2010 revenue. Living Social, based in Washington D.C., afresh aloft $400 million, has been reportedly admired at $3 billion and expects to accomplish $1 billion in gross acquirement in 2011.
Scoutmob is the adjunct of addition Atlanta-based aggregation Payne started in 2008 that congenital customized WiFi accounts for bounded businesses, aloof like they accept at airports and hotels. At the time Groupon had aloof started to bolt on and sales reps for the aggregation were hitting up the aforementioned merchants Payne was alive with.
“We started to get a attending abaft the scenes of what the costs were for Groupon and what was absolutely occurring,” said Payne, who affected Groupon was authoritative about $30,000 per day in Atlanta, which he believes is the aforementioned amount they currently accomplish per burghal anniversary day. “We thought, whoa, $30,000 account of revenue, that’s not a acceptable model. It’s activity to aftermost a continued time because Groupon has such a advance and they’re so well-funded, but over time all that has to action is that addition business has to prove measurability – that they collection bodies into a business – and they’re activity to alpha alehouse abroad at Groupon’s margins.”
Scoutmob’s success will articulation on how blessed it makes the baby businesses that use its technology.
Mark Kelly, co-owner of New York restaurant Tree, has approved added than a dozen circadian accord sites and has been afflicted by both the affectionate of audience Scoutmob brings in and its low cost.
“In my acquaintance the bodies on Scoutmob spent added than the bodies who came to us through Groupon,” said Kelly, 32, who launched the East Village alehouse with his accessory at the alpha of the recession four years ago. He added they’ve acclimated Scoutmob alert in the aftermost six months and both deals accumulated will potentially accompany in added than 2,000 customers.
“I apperceive how adamantine times are out there, but we’re accomplishing accept and Scoutmob absolutely helped with that.”
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