Photo: Mr. Juninho / Flickr, CC.
“We are not a technology company, we are more of a people company.” With this strong statement, Tobias Tschoetsch from Groupon UK offered DD Summit Europe a perfect kick-off to launch the the first European daily deal event held in London on March 19th. During one day, several hundreds of top executives representing 25 countries gathered to discuss and share the state of the group buying industry in the old continent, less than three years after its creation in Chicago. With a great quality of speakers on stage and a professional organisation, this initiative of Stavros Prodromou was considered a success for the whole industry and proved to be very insightful on different matters.
After Groupon’s introduction – which reminded everyone their impressive leading market position with 48 countries presence and 33M active users – the day was dedicated to the future of the industry, in Europe and the rest of the world. European expansion strategy, new categories of offers and targeting, innovative services to merchants and mobile, here is what you need to know if you were not around St-Paul’s Church for this special day.
1/ European expansion – Low barriers to entry, high barriers to scale
Not everyone could be Citydeal – the Samwer Brothers’company which scaled their daily deal operations in 16 countries in less than 6 months before being acquired by Groupon. Therefore, expanding in Europe with an appropriate local approach was a key topic at the conference. And speakers on stage were pretty clear: even if the euro made it easier to expand in the continent, cultural differences are still to be considered essential in the equation. Even for seemingly close countries: “You do not want to consider doing business in Germany and France the same way” said Michael Brehm of Rebate Networks – founder and investor in several daily deal platforms mostly in Eastern and Northern Europe – in a panel dedicated to the topic.
Not surprising then that acquisition is still the preferred path for daily deal companies to enter a local market: Fabian Heilenman from Dailydeal.de (acquired by Google), Groupalia Joaqin Engel (which Latin America operations have been acquired by Peixe Urbano, brazilian daily deals leader) and Mark Bower from Kelkoo Select (acquired by Time Out) were on stage to confirm
2/ New categories for offers, better relevance for emails – The way to a better targeting
It all started with one deal a day and now the market is exploring each vertical and target. Travel, decoration, goods, live shows, high-end, families, students, today the daily offers are numerous and more diverse. One of the most important implications of this main trend is the amount of emails sent every day in order to show these deals: too many. And still, according to Paul Fisher – cofounder of Buyometric, leading daily deals aggregator in the UK – “email is king” i.e. the most engaged media when it comes to daily deals marketing. All players agreed on the necessity to work on a better targeting achieved with a refined segmentation based on customers’ interest and data. On that matter, Gerard Doyle from Discount Vouchers reminded the audience that the aim was not only to avoid the fatigue but also to increase revenues of their existing base: a case study shows a 250% revenue rise for 1M emails sending.
Groupon’s recent acquisition of Hyperpublic – an open platform for web’s local data in the US – confirms what should be one of the biggest group buying trends of 2012.
3/ Building relationships with vendors – Are daily deals companies becoming digital consultants for local merchants?
There is still space on the merchants’ side and the DD Summit Europe proved it. The recent launch of Groupon Scheduler in the US and European companies like Redeem&Get are great examples of new services provided to small businesses: they let customers book their deals online and help small businesses manage their published offers with an access to a comprehensive and personalised system. The young Irish start-up – which won the Spark of Genius competition at Dublin web summit – adds a marketing layer for merchants with database management features (surveys, emails and sms campaigns) as users opt in when they redeem their coupons on the platform.
Other great initiatives came from Living Social: they distributed 500 iPads to their merchant partners in London in order for them to be able to redeem their sold vouchers. They also achieved the biggest deal ever run in the UK with more than 30K coupons sold on a Marks & Spencer offer.
There were not any local merchants on stage at the DD Summit Europe but clearly their insights would have been very helpful. No doubt we will see physical brands joining the crew next time.
4/ Mobile and real-time – Who is ready?
The group buying industry is going mobile. At least, it is trying. Who is going for it? Are the consumers ready to buy deals instantly redeemable on their mobile phones? Will the merchants be able to upload deals on their own to fill their occupancy rate?
It seems that big players are betting on it. Groupon tripled its mobile application usage in December ’11 and is planning to roll out their mobile services in more than 30 countries in the near future. Living Social is seeing 23% of interactions happening through mobile and Peter Briffet was proud to put forward his Instant application (which seems to have taken a pivot into take-away and delivery since then) in order to show that his company definitely wants to stay on top of the technology race for hyper-local ecommerce.
Foursquare was here too, bringing its first European employee on stage to remind its strategic position: a 15M subscriber base using the mobile application to check-in and explore their cities, and great relationships with more than 750K merchants globally. If Foursquare did not make any moves in the group buying industry in Europe, the New-York based company is running pilot tests with different deal providers in the US.
Here we see real barriers to entry in the group industry coming and not every daily deal operator would be able to put technology on top of their priorities: we’ll definitely see much more product differentiation on that matter.
Great event. Great industry.
Not a “craze”, not a “phenomenon”, an industry.
A global industry with different geographical logics, even among Europe (ask Kaprinay Zoltan from Bonuszbrigad the leading Hugarian daily deals website if he wants to sell his business to Groupon at any price and you will be surprised by the answer).
An industry with “clear leaders who are here to stay the same way Amazon and Ebay kept their dominance on other ecommerce markets” said Sean Seton-Rodgers from Profounders Capital.
An industry which should now behave more like an established sector. A way would be to create its own Trade Association, with a coordinated voice and an aim to produce research, to define best practices, minimum standards, and more important, to conduct public awareness campaigns for both consumers and merchants. This idea – put forward by Mikal Belicove from Entrepreneur.com as a conclusion of the day – would clearly represent a stepping stone for daily deals. But are the big players ready to congregate today for the sake of the industry?
Well, this is group buying after all.
Disclaimer: I was a moderator in the European Panel
Update: Stavros Promodrou launches The Global Daily Deal Association along with major group buying players. See Press Release