Some time back I blogged about GroupOn, the Chicago-based Group Buying phenomenon. Since then they have continued their astonishing pace of growth and are now available in over 100 cities including 10’s of locations outside of the US (all in 15 or so months from launch!). GroupOn’s growth is somewhat propelled by their early mover advantage which has afforded them a large amount of mainstream consumer press in the US, driving awareness of the segment and brand (all that’s required to acquire users) while they gathered cash to drive acquisitions that further accelerate their growth cycle and defend the space. The simplicity of the Group Buying model helps too, as does GroupOn’s excellence in execution. Much like Google the segment they dominate has now become synonymous with their brand in the US at least – something GroupOn’s competitors’ may find is impossibly hard to shake.
Ironically, Group Buying is a very easy segment to enter, it’s a a strong cash business that you can start with a basic transactional website and a couple of sales people, in Australia this has played out and there are already ten or more GroupOn pretenders live and running in only 5 or 6 months. Today’s winners in Australia started with a reasonably large base of consumers they could send offers to from sister businesses (www.scoopon.com.au from www.catchoftheday.com.au ) or smart Facebook feeder strategies (www.jumponit.com.au from www.facebook.com/sydneydeals ) offering them clear differentiation from the smaller competitors.
Another similarity to Search and a challenge the also-ran Group Buying businesses face is the lack of Switching Cost, meaning that Consumers are able to jump between providers with little or no personal cost, switching “loyalty” at the click of an Unsubscribe link. Chances are a number of poorly funded Group Buying pretenders will come and go over the coming months, it will no doubt be fascinating to watch!