Today’s social networking consumer doesn’t clip coupons, instead clicks online for deals of the day

Gillian Shaw
Sun

Lesel Radage started Grooster during a break from her career as an electrical engineer. Grooster offers discounts that take effect when enough people sign up. Photograph by: Steve Bosch, PNG, Vancouver Sun

Vancouver startup Grooster is the latest entrant in a shopping phenomenon that is seeing consumers tap into their social networks to bolster their buying power without having to collect friends and relatives together to haggle for group discounts.

Vancouver mother Lesel Radage has taken a detour from her career as an electrical engineer to take on some of the big players that are already cashing in on the “social couponing” trend with discount deals-of-the-day that come into effect when enough buyers bite.

“It’s such an interesting space, the startup costs are relatively low,” said Radage, who started Grooster with her childhood friend and university roommate Trish Mandryk. “Our competitive advantage we think is being local; that is pretty important.”

Radage said competition from pioneers in what is a relatively new consumer offering is helping her company get a foothold because businesses are already familiar with the model.

Among the giants, the Chicago-based Groupon has added Vancouver to the list of cities where it is offering deals (Thursday’s deal was for $20 worth of takeout food and drink from Quince on West Third for $10, with 307 people cashing in.)

“Business owners like the concept, they like the model and they want to do it again,” said Radage. “They get to choose what their deal is, what time of year suits their promotion and a maximum number of customers they want to offer that to.

“We encourage them to set a maximum, some want to offer it for 100 people; others don’t care if they sell to 1,000.”

The deals change every day.

Grooster’s inaugural offering is $20 for $40 worth of food and drinks at Stella’s on Cambie or Stella’s Tap and Tapas Bar on Commercial Drive. Would-be buyers sign up for the deal and when the minimum — in this case 25 — is reached, their credit card payments are put through and the offer is activated.

With 40 signed up Thursday, the minimum on Grooster’s first offering was far exceeded before the deal closed.

While e-mail alerts are offered to tip consumers to the daily deals, the real driving power behind them is social networks like Twitter where consumers do the marketing for businesses by spreading news of their offerings.

Groupon launched in 2008 but already it has prompted a wave of startup followers, several of which now offer their deals for Vancouver shoppers. In May, Groupon announced the acquisition of its largest imitator, Citydeal, which had taken the Groupon model across Europe.

Radage said businesses that have had success with Groupon are willing to sign on with other such services.

“It helps us almost that the model is becoming so prevalent,” she said. “I don’t have to explain the concept.

“The market is being so infiltrated. Businesses don’t have a choice — Groupon is so successful it is hard to argue with the model.”

Most of the deals focus around entertainment and food offerings and services such as spas, although Radage said retailers can create varied offerings — like offering a gift certificate of a certain value to shoppers who spend a minimum amount specified for the store.

Grooster has launched in Vancouver and with plans to add Calgary, home to Radage’s co-founder Mandryk, next week.

“We are going to try and corner these two markets before we expand nationally,” said Radage.

As an indication of the growth of the shopping concept, Vancouver wasn’t even on the social couponing map when Radage and Mandryk first decided to launch their own Groupontype startup here.

By the time of their launch, Vancouver consumers already had a choice of services, including WagJag (Thursday offering $30 worth of buying power at Jolly’s India Bistro in Kitsilano for only $15), StealtheDeal.com($15 of movie rentals for $4 at North Vancouver’s Odyssey Video) and Groupon.

StealtheDeal.comis a Canadian company, launched last October, expanding across the country with Montreal added last week.

Other companies following Groupon’s lead include TeamBuy (available in Toronto but not yet in Vancouver), WebPiggy (available for Toronto buyers with Vancouver promised soon), Group Swoop (for San Francisco shoppers), TeamSave (Toronto only), Scoop St. (for New York City deals), LivingSocial (U. S. cities only so far with Toronto promised), SocialBuy (Los Angeles, San Diego and San Francisco), BuyWithMe (U. S. cities only), SwoopOff, (Los Angeles-based), My Daily Thread, (U. S. markets only) Wowcher (United Kingdom-based, offering U.K. cities).

And if all that consumerism gets a bit much for you, check out Nopuorg, a parody (Groupon spelled backwards) with such tongue-in-cheek offerings as $15 for $30 worth of ballet, with the review: “Some people love The Ballet. They should marry it.”

And the caution: “Seats are first-come, self-serve; please bring your own. You will need a ticket to reach the Will Call area to pick up your ticket. Music not included with Nopuorg.”

© Copyright (c) The Vancouver Sun

This entry was posted on Friday, June 4th, 2010 at 9:06 am and is filed under Other News Articles. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.