Social Buying Is On Fire

by Luckie Rethink Tank

Groupon, LivingSocial, SocialBuy, BuyWithMe, eWinWin, PriceBunch and dozens more help consumers band together to save money on everyday products and services – often on the local level. One estimate says there are more than 130 such sites in North America alone. With so many social buying sites, there are now social buying aggregators (DealRadar, DealGator, CakeDeals, YipIt and DealPage among others), to help you manage all the offers you have pouring in. There is even a site (DealsGoRound) that lets those with social buying remorse sell or swap the deal they no longer want.

How did this happen so quickly?

Founded in 2008 and currently boosting 35 million subscribers, Groupon is the 800 pound gorilla right now. Just last week Google offered to buy Groupon for $6 billion (that’s billion with a B). Oddly, they said no. To put this offer into perspective, it would have been Google’s biggest acquisition to-date. Not to be outdone, Amazon.com has plunked down $175 million for an investment in LivingSocial, founded eight months after Groupon and currently the second biggest social buying site with 10 million subscribers. Now with the Amazon.com investment money, LivingSocial says they will reach the 35 million subscriber mark in 2011.

For the most part, the offers on these types of sites have been confined to local markets for things such as carpet cleaning, manicures, food and drink, coffee shops, bookstores, combat cardio classes, etc. With deals ranging anywhere from 50%-90% off, many offers are almost too good to pass up, which is probably why these sites have exploded in popularity. Who would have thought that an idea based off a lowly marketing tool, the coupon, would be such an explosive hit?

Much like we saw with the emergence of microblgging (hello Twitter) and more recently location-based check-in (Foursquare and Gowalla), there are a ton of players in this space with a couple heavyweights emerging (Groupon and LivingSocial). Will these two end up being the big winners in this space? Time will tell.

What is probably more interesting is understanding how these services will start to change once the investment money kicks in. You have to assume there will be a lot more back-end analytics, tracking and accountability, which will likely attract bigger marketers with a more national presence. The Gap has already broached this space with the first national Groupon last fall, selling 441,000 $50-for-$25 offers in one day. Once the bigger marketers show up en masse, will the local guys get squeezed out or pushed to the side? If that’s the case, will these services start to lose their charm or appeal to consumers with the local flavor gone? Either way, 2011 looks to be a banner year for consumers looking for deals too-good-to pass-up.

So if all of this wasn’t enough, don’t forget that 500+ million user Facebook recently launched their location-based check-in service Places and quickly tacked on Facebook Deals, which among other things, offers a group deal function. And Walmart has quietly launched a deal platform within Facebook called Crowdsaver. When enough Walmart fans like the posted Crowdsaver deal, it is activated.

This is one trend that is going to be very interesting to watch.

Photo credit adpulp.com

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