A new New York startup, Scoop St., is opening its online storefront to the public to jump on a hot e-commerce trend: Group coupon buying.
The idea is that Scoop St. gets local merchants — starting in New York City — to offer one-time deals (“scoops”) that are only available if a large enough group of people is interested.
Today, for instance, the site is offering a $62 mani/pedi for $20 at Element Beauty Lounge, a New York salon. Scoop St. cofounder David Ambrose tells us that it was the company’s fastest deal ever to activate, meeting its minimum purchase requirement of 20 deals in less than two hours.
Group buying is a market that’s been around offline forever, and recently became popular online — thanks mostly to Chicago-based Groupon, which raised financing late last year at a $250 million valuation. (Click here for a tour of Groupon’s awesome office.)
Ambrose and fellow cofounder Justin Tsang met in college — Georgetown — where they were roommates. After school, Ambrose worked in tech PR for a few years and Tsang worked on Wall Street, and the two saved up enough money to start the company.
They raised an angel round last year and are in the process of putting together more financing — drawing interest, we hear, from at least one big-name VC firm. (The company is one of the launch companies working out of the new Dogpatch Labs startup incubator in New York, but is quickly outgrowing its desk.)
The business is pretty simple: Scoop St.’s sales department sets up deals with local merchants, its editorial department writes copy, and then the deal goes live — one deal at a time. Scoop St. collects money from its customers via credit card, and gives the merchant a share of the revenue.
What does the merchant get? New customers — potentially cheaper and more trackable than other forms of online advertising or customer acquisition. The ideal situation would be getting customers in the door through the coupon, then having them spend more than their gift coupon allows, returning several more times, and telling their friends.
As far as growth is concerned, Scoop St. could move into more cities, as Groupon has, or potentially into verticals. There could easily be specific interest among buyers and merchants in corporate, food, booze, or apparel verticals.
The biggest challenge for now will be attracting users and merchant partners, with Groupon already popular and established in New York. (Recent deals have fetched up to 4,000 buyers.)
But deal-chasers probably won’t be offended by two emails in their inbox per day, so if the deals are good, Scoop St. could work.