The recent mainstream media articles demonstrating evidence of Groupon’s shortcomings (including last week’s article) are focused on the consequences of its massive distribution capabilities and non-local presence.
First there was the dodgy fake deals in Brazil, then there was a business owner saying offering a Groupon deal was the worst business decision she ever made, then there was the sketchy photography offer.
One Hyperlocal Solution
Local women’s groups have always had a commercial or community support function in society, and they could easily form group buying engines if they have a ringleader(s) and access to a couponing system. These local buying groups can mitigate the risks that Groupon has been dealing with.
- Deals can be sourced with local businesses from within a women’s network, much more easy now that everybody seems to be on Facebook. Local businesses will appreciate on-the-ground servicing from within their community as opposed to dealing with a Groupon tele-rep based in Chicago.
- Local businesses doing a coupon campaign with a local buying group limits the risk of an oversold offering that Groupon poses. A local buying group will also be more accommodating and flexible, allowing clients to experiment with their ads or run offers on a weekly or monthly basis. Getting on Groupon’s overbooked schedule can be a challenge.
- Fraudulent or unethical businesses can be weeded out simply because everybody in the local business community will know each other.
- The fees paid to a local buying group will likely be less than 50% of coupon face value fees that are generally paid to Groupon. Remember that coupons always reach the same local consumer, so in the long run it’s more economical to pay fewer fees.
Case study: JuiceintheCity.com
JuiceintheCity.com is a great example of a couponing system run by mothers in the Peninsula and South Bay areas of the SF Bay Area. Here is the story from co-founder and CMO Sarah Eisner:
Each deal is found and developed by one of Juice’s “Local Business Consultant” moms who creates “homey” ad copy that sells the deal through personal testimonial:
Juice in the City recruits their peers to act as their sales team to source deals.
It’s a grass roots employment opportunity that reflects how the recession changes the nature of work; we’re not working for a company any more, but a group, a cooperative. I found out about Juice in the City simply because a restaurant owner I know related the story of all these couponing services now going door-to-door for sales.
Future of Local Group Buying
The key to developing local group buying systems today is simply access to a group buying application system. This system includes:
- the group buying application that processes the deals by credit card, fulfills coupon delivery and provides after market support.
- Tutorials on how to market online coupons to the community (it’s much more effective if one already has a community media presence such as Breaking News)
- Tutorials on how to sell deals to the community
- Tutorials on how to create effective advertising
Item #1 is key because it’s the executing technology. The current phase of the group buying industry is surprisingly less than a year old, and there are very few plug and play applications for small business. The solutions can be expensive because more focus is being put on developing enterprise coupon platforms for media and media networks. Items #2, #3 and #4 might draw on the expertise and experiences of a solid management team. Although it seems that the future of local advertising might be every townie offering a coupon deal, I believe those who establish a community media presence will win out.