The Groupon Effect Heats Up Collective Buying
August 4th, 2010 | Published in Economy, Innovation, Tech | 2 Comments
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| The SW Portland restaurant AJ on the Rails took note of other businesses’ Groupon experience and bolstered staffing. Photo: Dustin Eppers/EnzymePDX |
In less than two years, Groupon has become the undisputed king of online deals. From humble beginnings in Chicago, the concept of recruiting like-minded consumers online to share in a rock-bottom deal of the day has spread all over the world. While an initial learning curve on how to handle the sudden influx of traffic overwhelmed some businesses , Portland vendors have quickly come to grips on how best to prepare for the army of deal-wielders that Groupon and similar sites can deliver.
Patrick Tillery, manager of the SW Portland restaurant AJ on the Rails, couldn’t be happier with how his Groupon turned out. Before stepping into the breach, he took cues from watching other stores struggle with the sudden surge in business. “It worked out extremely well,” he said. “We were able to learn from seeing what other businesses had gone through, and that gave us a little heads-up in knowing that our Groupon is going out today, we bring in extra staff … It’s definitely something you have to go into with eyes wide open.”
The concept of group buying for bulk discounts is not new, but its new-found success came years after many failed attempts. In the early dot-com era, sites like Mercata and MobShop tried to harness the public’s thirst for quick deals but were thwarted by the absence of ubiquitous, fast Internet connections and the now-commonplace social networks that enable deals to spread virally. Groupon’s success lies in these factors, as well as in the decision to target local businesses in numerous markets that provide services and experiences, as opposed to physical goods.
The sheer number of Groupon clones continues to increase worldwide – even Portland has its own home-grown clone in Palooz. Most telling is how LivingSocial, the No. 2 deal site, picks up the slack that Groupon drops simply due to the site’s popularity.
Joy Leising, co-founder of the art workshop and gallery The 100th Monkey Studio, described her experience with LivingSocial after Groupon didn’t respond to her initial inquiry. “LivingSocial approached us,” she said. “They have researchers who research the cities. A Portland rep came out to make sure we were a legitimate business, then they went forward with the deal.” LivingSocial also suggested what kind of deal to use ($20 for $40 worth of DIY art classes) and wrote the website copy.
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The lack of response from the big sites is a common story we’ve heard from the businesses we’ve spoken too, especially the smaller ones and those outside of the downtown Portland. I’m with It’s Just Deals (ItsJustDeals.com), another locally owned and operated group buying site in Portland, Oregon. We want to make group buying promotions accessible to more businesses. Demand is too great right now; waiting lists are months out. If group buying sounds interesting to you, come check us out at http://www.ItsJustDeals.com.
It’s pretty interesting to me that there’s still so much demand, even considering how many other sites have sprung up after Groupon came along. So far that’s two that are based in Portland – think there are any others?