Group Buying and Daily Deals Website - Build a Profitable Business by Helping People Save Money

When the US Economy tanked people tightened up their wallets more than ever, but even in good financial times people love to find deals and that's why new daily deals websites are popping up everywhere. You've probably heard of the big name players such as Groupon and Social Living. It's easy to find their ads on many of the mainstream websites and for good reason too as providing daily discounts is a big time business so they are trying to buy up marketshare as fast as possible and profit from the lifetime value of each new user.

Frequently Asked Questions About How Groupon Works

How does the daily deal website Groupon work for consumers?
How does Groupon work for businesses and why do businesses offer crazy, unbeatable discounts through Groupon?
How does Groupon make money?

For Consumers

For Consumers it's simple to understand. You sign up at Groupon and get daily emails with huge discounts on businesses in cities that you select. If a deal strikes your fancy you buy it for yourself or for a friend but your credit card is not charged until the deal minimum has been met. Once that minimum has been met the deal is on, your credit card is charged, and you get your discount coupon soon after.

For Businesses

Businesses need new customers to grow and Groupon can give them instant exposure to their city's share of Groupon's 10 million + subscribers that have spent over $446 million on over 10.5 million deals. Those numbers are impressive to any business so it's no suprise that there is a long waiting list to get featured on Groupon.

Businesses offer unbeatable deals through Groupon but they set the terms and only have to honor the deals if they get a minimum number of new customers from Groupon. When this criteria is met, the deal is on and Groupon gets $$$$. Many of the businesses that participate in Groupon know the average lifetime value of a new customer to their business so they are happy to break even or lose money on the initial deal since it means they'll make major profits from repeat customers.

If you start your own daily deals website, can you compete with Groupon? 

Good question. Currently Groupon is in 85 major cities and is continously expanding thanks to a $135 million investment by Russian internet investment group Digital Sky Technologies. (reuters.com)

So it's probably not a good idea to play copy cat and compete head to head with Groupon on a large scale, however, if you have a large network of friends and family in your city or perhaps several thousand facebook and twitter followers then you'd certainly be in a good position to compete on a local level and perhaps get acquired by Groupon or one of their competitors that want access to your city and connections.

Start with a Proof of Concept

Before you invest a lot of time and money building a daily deals website you should spend a day or two doing a proof of concept.

1. Contact local businesses and tell them that you have X people that you can promote their business to and find out the best deals they are willing to offer. 

2. Use Polldaddy.com or similar poll service and send out a poll to your network and ask them which deals they would be interested in. Offer a free prize if needed to get a higher response.

After these two steps you should have a good idea if you have what it takes to make this business work and can then can decide to take the bigger risk of setting up a business and investing your time and money in building the website needed to promote and sell your daily business deals.

How much will it cost to build a deal of the day website?

As always, it depends but if you want a no frills, basic website with a CMS, an attractive design and the essential deal of the day e-commere functionality then you can expect to pay approx. $5,000 to $10,000. You'll also require a merchant account and will need to become PCI compliant since you'll need to store user credit card numbers in order to charge them when a deal's minimum has been met.

Some websites that are now offering cheap or relatively inexpensive, Turn-Key Group Buying Websites are:

Groupon and Living Social Website Clones

http://www.agriya.com/groupon-clone
http://groupbuyingsite.com/
http://groupscript.net/

Yipit Clone
http://www.agriya.com/yipit-clone

Business to Business Deals Website

Currently it appears that Groupon is dealing primarily with Business to Consumer deals so an untapped opportunity exists in Business to Business deals. The concept really boils down to group buying power. If you can build a loyal audience and have an inexpensive means to communicate with them (website/email) then you have endless opportunities to build a profitable business by saving your audience money.

Groupon Related News

April 20th, 2012 - Groupon's stock drops to an all-time low of $11.02. Groupon's CEO Andrew Mason doesn't seem worried and says he is still confident in the future of Groupon.

November 4th, 2011 - Groupon goes public. The stock surpasses $30 before settling in the mid 20's on the first day of public trading.

April 15th, 2011 - Bloomberg.com reported that Groupon Inc. was close to retaining Morgan Stanley and Goldman Sachs as the lead underwriters for an IPO later to take place before October of this year. Groupon's valuation in private market trading was estimated at $5.6 billion dollars in the first quarter of 2011.

March 15th, 2011 - Facebook announced their plans to expand their Deals feature and will begin testing the expanded service in Atlanta, Austin, Texas, Dallas, San Diego, and San Francisco. With Facebook's 300+ million user base this will be very interesting to see how effective they are at competing with Groupon.

December 3rd, 2010 - Groupon rejects Google's offer to buy the company for a reported 5 to 6 billion dollars. Rival group coupon company, Living Social, received a $175 investment offer from Amazon.

December 1st, 2010 - Numerous news websites are reporting that Search Engine and Contextual Advertising Tycoon Google has a strong interest in buying Groupon. It is rumored that Groupon's monthly revenues are approximately $50 million put the company at .6 billion in revenues over a year. Groupon employees an estimated 5000 people globally so it is likely that Google wants to tap into this local business sales force to help grown their advertising revenues in addition to carrying on the groupon deal of the day model. Some experts are saying this is not a smart move by Google because Groupon is a business that can easily be replicated. On the other hand having 3000 people to upsell advertising to a huge pool of businesses that are trying to acquire new customers certainly seems like it could add a nice lift to the already staggering revenues of Google. If Google's acquisition of Groupon happens it will be the largest web deal in history, currently estimated at $6 billion dollars, which is almost double of the $3.1 billion Google paid to acquire Doubleclick in April 2007.