Foursquare has a partnership with Groupon to sell its daily deals, Mashable reports.
Foursquare announced partnerships with a bunch of daily deal sites last month, but Groupon was missing.
The idea is fairly straightforward: when you look for venues around you on Foursquare, it would tell you which one have a daily deal option open. If you buy that deal, Foursquare gets a cut. Everyone wins: consumers get deals, venues get customers, daily deal sites and Foursquare get money.
Now we know why Groupon was missing. Not because of the two companies’ increasing rivalry, but Foursquare’s Groupon partnership doesn’t just involve Groupon’s regular daily deals product, which are also included, but its new product, Groupon Now.
Groupon, which loses tons of money, is essentially betting its future on its mobile app, Groupon Now. Unlike daily deals which are blasted out to millions of people every day, Groupon Now deals can be highly targeted depending on location, time of day and where you are. This would be a better deal for merchants who would use Groupon for yield management (filling empty tables at a restaurant that they’d lose money on anyway) instead of advertising with uncertain results.
And crucially for Groupon, this would be a much, much harder business for its zillions of copycats to get into, because to make something like that work you need a critical mass of people and merchants offering deals all day near your users.
And because you need such a critical critical mass, despite how huge Groupon already is, Groupon Now is only live in a few cities. And for that reason, the Foursquare deal is very smart.
Foursquare has over 10 million users, all of them mobile and who presumably go out often. Many of them are already on Groupon, but probably few of them use Groupon Now. It’s also smart for Foursquare, because it offers its users the hottest new thing out of the daily deal industry (and the company gets revenue, but it doesn’t need it right now).
And it’s probably a little more complicated to integrate a live platform like Groupon Now, which explains why it took a little longer.
All in all, a very smart deal.