Photo: Dan Frommer, Business Insider
Google‘s reported $6 billion offer for Groupon has the doubters saying that this two year-old business model has already peaked.We think that’s very far from the truth. As huge as Groupon and its leading competitor, LivingSocial, have become, and as many imitators, aggregators, and related businesses have piled on top of it, we think this is still a young market with lots of room for growth.
One sign that daily deals are just heating up: daily deals are just starting to catch on in some of America’s biggest markets.
The Local Offer Network, which runs deal aggregator Dealradar, distributes deals to publishers, and offers a white label deal product, gave us this data on the top U.S. cities by volume of deals offered. Broken down by percentage of total U.S. deals:
- Chicago: 8%
- New York, Boston, and San Francisco: 5% each
- Los Angeles, San Diego, and Washington D.C.: 4% each
In other words, the home of Groupon, followed by the three major cities for venture backed startups. New York is roughly three times the size of Chicago. Boston and San Francisco are tiny compared to cities like Houston, Philadelphia, and Phoenix, which are far behind in daily deals. D.C. — home to LivingSocial — is even smaller.
Basically, daily deals are still biggest in the markets where daily deal startups have been founded, not in the markets with the most consumers.
Even if we suppose that Chicago is 100% saturated, the daily deal market still has huge growth potential as the rest of the country catches up.
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