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Groupon – harnessing web for group discounts

groupon-logoOne year old Chicago based startup is making headlines today. Groupon, a website that delivers sweet random deals to your email box each day has just raised $30 mil from Accel Partners, the venture capital firm behind Facebook and many other successful online businesses.

The idea is very simple - the Groupon team finds businesses willing to offer a deal if a certain number of people sign up and then features these deals one at a time on their website. If enough members buy in - everyone gets the deal, if not - no one gets it. The deals are mostly local service oriented discounts, e.g restaurants, museums, etc. The company started in Chicago but now offers similar service in 45 more cities around the US.

Groupon was founded by Andrew Mason of ThePoint. If you are familiar with the group action site you can quickly see the similarity between the two. ThePoint harnesses the powers of masses for social cause, Groupon does it to please the consumer in us. The difference? Groupon is now a profitable business and growing fast, ThePoint on the other hand… you can see it for yourself. This month monthly stats are 1.3 mil and 50K for the two domains (according to Compete).

The notion of using the buying power of masses is not new. A couple US companies have attempted to deliver, MobShop and Mercata (co-foundered by Paul Allen). Both shut the doors back in 2001. Later, in 2006, The Christian Monitor wrote about the trend picking up again, now in China. I wonder what is different this time.

The overall concept of “one deal a day” is somewhat similar to what Woot is doing with consumer products except that Woot doesn’t have any “must buy minimum” conditions - they themselves deal with the risk of underselling an unpopular product. What would it take for them to spin off another sub-domain to their Woot empire and start offering conditional group discounts on consumer products? My guess is that the limit doesn’t only add a safe cushion to the business, it also creates a certain appeal - “it is so hot, you can only get it if…”! I am giving the Woot folks a month. :-)

Read also:

Woot team launches a deals site

Wine.Woot, Shirt.Woot, Sellout.Woot, Kids.Woot, and now Deals.Woot! Just in time for the holidays the team that basically invented deal a day shopping is expanding Woot-empire, and this time it is all about community… well… kind of. When you open the front page, roughly half of the screen above the fold is dedicated to sponsored deals - a moderated content provided by partners, so you judge how community friendly Deals.Woot really is. ;-)

Overall the site has a neat design and somewhat resembles Digg. Adding your own deal is easy and takes just a few mouse clicks. Interestingly that voting is restricted only to the members who have ever purchased anything from any of the Woot properties. Here is how Woot explains the restriction:

We restrict voting to users who have purchased something from one of the other Woot stores. It’s not just because we want your money (which we do) - it’s the best way to be sure all the votes are coming from real people and not spam-bots or phony accounts. The best way we can think of, anyway. For now.

When you submit a deal it is placed into the ‘Fresh’ list and will sit there until it gets promoted to the ‘Popular’ list based on deal activity and some other black magic. The FAQ doesn’t disclose how this exactly happens but one can guess that number of votes, clicks and comments gets involved.

In addition there is also a discussion area which is envisioned to be the place to go if you need a ‘deal question’ answered. Right now, since the site just launched, it is filled with questions related to the website functionality. You can find members bitching about expired deals and other typical ‘deal site’ stuff.

The sole most valuable asset Deals.Woot possesses is the active community of Woot admirers, many of whom are core bargain hunters. It is not unusual for a single deal to gather 50-60 comments, the only other deal site I know that can challenge Woot in this regard is SlickDeals.

I will be curious to see how well it fairs in the coming months. For some reason it reminds me of the first wave of social deal sites that launched in 2006. Not all of them have survived. What do you think, does Deals.Woot have a chance?

Related: Digg For Bargains: Deals.Woot Is Now Open To The Public (at TechCrunch)

deals-woot

My experience with Google Voice Android App

With all the publicity about Apple rejecting Google Voice iPhone app I just had to install it on my HTC G1 to check what the noise is all about. First of all to use the app you need to have a Google Voice account. It is offered by invitation only and to get it you need to fill out this form and wait for an invite code to show up in your email box in a few days. You are more lucky if you have a GrandCentral account. Since the company is now owned by Google you can convert your account to Google Voice and this way get access to the app. The upgrade took me just a few moments and it kept my old contacts and call settings.

upgrade to Google Voice

The new service has all the cool features that GrandCentral had plus more: voice mail transcripts, conference calling and SMS support. No one sends me SMS messages and I am yet to try conference calling but I find voice mail transcripts a great time saver. Here is how a typical voice mail transcript looks. The only bits that have errors are the last name and the phone number (it somehow got an extra digit which should not be there).

voice mail transcript sample

The release of Google Voice Android app has made the service even more useful since now I can not only receive calls to my Google Voice number but also make them and the receiving part will see my GV number despite the fact that I call from my cell phone which has a different native number.

The app nicely integrates with the Android contact book and you can configure it to intercept all calls, only international calls, or prompt on each call you make. So far I have configured it for international calls since the rates are much lower than what t-Mobile offers but I will be glad to go all the way with the first option if/when Google offers to port my cell number to Google Voice. Too many people have it and it will be too much of a hassle to migrate.

Android Google Voice Settings

Meantime I can still use the GV number as a temporary number I want to give to the businesses and people whose calls I want to screen. E.g. I am going to give it to the car dealers when I go shopping for a new car to replace my Accord which later this year will have 160K miles on the odometer.

By the way, I find GV international calling rates very competitive. Canada is free, Ukraine is 10 cents and Russia is 5 cents (these are the 3 countries I call the most). JustVOIP is still cheaper but it is hard to compete with the Google Voice convenience so most likely I will use it when I have to call on the go (which previously was a big hassle since I had to dial all those access codes).

Do you use Google Voice? Is it running on your phone? Please share what you like/dislike about it in the comments

Cheapest ways to send money online

This is a hat tip to my friend Mike who just wrote a great blog post about different alternatives for sending money online. Here are the online services he mentions, some I use while others I have not even heard of:

Conve-
nience
Costs Notes
Paypal 5/5 3/5 Average fees, Almost everyone has an account
Amazon 4/5 3/5 Free till end of September, same fees as Paypal after that
Obopay 3/5 5/5 Lowest fees of all, not many have an account
MoneyGram 3/5 1/5 Highest fees of all, worldwide reach to many countries
Xoom 3/5 4/5 Fees lower than MoneyGram, limited countries

Paypal is the winner for occasional payments. If you send money to mostly the same people then you should consider Obopay because of the low fees. International transfers - give Xoom a try and only use MoneyGram if Xoom doesn’t send money to the country you need.

Source: What is the best way to send money online? (at Buxr Blog)

Alice, you broke my heart!

Alice.com logoNot often these days a new shopping startup comes around that gets me excited. Modista looked cool but was not very useful. ShopSavvy was useful but I only used it so much - my shopping is mostly online. BeatThat had a cool idea but implementation fell short - too few products. All these services offered something novel but they all lacked the scale.

Alice.com is a new startup launched by the same folks who sold Jellyfish to Microsoft in 2007 and pocketed $50 mln, and it really promises to be something big. On the outside Alice is a neatly built shopping site to buy household essentials with thousands of names in stock and free shipping on everything. On the inside, Alice is an open platform for manufacturers to sell the kind of products they want at the prices they set, the first of a kind from what I know.

How Alice helps consumers

The shopping part of the site is very clean. Products are presented in a nice grid view, each one is provided with an image, details, and even price comparison. Some items come in several packaging sizes and if they do you can easily cross reference them. The overall interface reminded me of Endless.com, the shoe store by Amazon. It is very clean and very nicely organized.

As you add items to your cart you can also add them to your list of things to buy regularly and select the refill frequency. Alice will then send you a reminder when you are about to run out of toilet paper, toothpaste, or whatever else you added to your list. As I already mentioned, shipping is free on all orders, something a bargain hunter will certainly appreciate.

The closest competitor to Alice is probably Amazon, and I have to admit Alice stands favorably so far. Even though Amazon offers a greater variety of brands, Alice has the most popular ones covered and the package size assortment is much better. Amazon typically forces you to buy large amounts while with Alice you get same package size you will typically find in your local grocery store.

One more complain I have about Amazon is the third party and “soon to be in stock” offers which flood search results and really degrade your shopping experience. I wish there was a way to filter them out on demand. Alice on the other hand only lists in-stock products and all of them qualify for free shipping (did I already mention it? ;-) )

On top of the typical shopping functionality Alice offers some bells and whistles like Budgeting (these are in essence your monthly expense stats by product category) and Neighborhood (a basic set of social tools like friends, profiles, chat, walls, etc). There is not much going on yet in the Neighborhood except for the chat area which is dominated by the former JellyFish members some of whom have ported their screen names to Alice.

How Alice helps manufacturers

However it is not the bargain hunter and online shopper in me who was more excited by the Alice’s launch. It was me - the entrepreneur. What Alice is doing in the CPG market now is what Zecco have tried to do with online stock trading. This article explains a lot of details about why this is different from what has been done so far. In the words of Brian Wiegand (Alice.com CEO) himself:

We’ve created a platform that allows the major CPG manufacturers to actually become the retailer and sell directly to the consumer,” Mr. Wiegand said. “Retailers increasingly have become manufacturers. So the next logical step is for manufacturers to become retailers.

I am eager to see if the idea stands and if Alice grows enough to successfully compete with the traditional players and to become profitable. According to this Reuters post, the startup makes money off of manufacturers “by giving the companies spending data, advertising space and distributing samples for them to targeted customers”. My understanding is that with the traditional model the store makes money via price markup and so the revenue comes from the consumers.

Will this new model bring shoppers lower prices and better service? It is hard to say. Initially the answer is definite yes since everyone including the manufacturers is vested into the success of this enterprise and are willing to sacrifice some of the revenue in exchange for great initial impression. What will drive prices down later on? It could be the transparency that Alice built into the platform, or it could be the volume (if the site really takes off). Whether Alice.com is successful or not, I already feel it is promising to be a very interesting experiment!




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