GroupOn here in Australia, Bait and Switch is tactic #1

Posted on by Billy Tucker

I was disappointed to hear about GroupOn’s Bait and Switch issue concerning the Valentine’s Day offer with FTD, however I immediately jumped to their defence.

A large part of Cudo’s operation is focused on ensuring that the offers we provide are 100% genuine, not just because we advertise on TV and are subject to rigorous standards, but because we believe the long term success of Cudo is hinged upon trust.

Our Merchant partners have to trust that Cudo will do the right thing by them by providing a great audience of new customers, broad brand promotion as described and payment in full within five days. And our members have to trust that Cudo is all about genuine no-brainer offers!

GroupOn must also have a whole team of people focused on ensuring that offers are “as stated”, hence why I jumped to their defence. However after seeing the following “all you can eat” ad, I am no longer sure!

Clicking on the ad for $8 all you can eat Macaroons takes you to a sign-up page, no such offer exists.

Deceptive. Yes. Bait and Switch. I think so.

Unless I am missing something, this type of Bait and Switch advertising is way out of line and threatens to damage the market as a whole. One thing is for sure, Cudo will never resort to these desperate tactics.

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Group Buying – audience by numbers

Posted on by Billy Tucker

At Cudo we made a decision to do things differently.

Until Cudo came along, Group Buying business were based on the following core principles:

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Long term this approach is seriously flawed.

Database-driven Group Buying is a race to zero. Competing primarily on database size means a group buying company is vulnerable to being undercut on commission (revenue share) by competitors with similarly sized or smaller bases. We are already seeing a significant reduction in share from 4 of the top 5 Group Buying business in Australia (Scoopon as little of 10%, Spreets <30%, Jumponit <40%, ourdeal <30%) . Only Cudo is holding share at 50% on each and every offer (averaging 49.6% revenue share to date).

Another key flaw in the database-driven approach and a common complaint from Merchants around the  world is that the average voucher buyer looks more like a bargain hunter than the Merchant’s target customer, meaning less strategic value for the merchant, making the overall category less attractive to Merchants over time.

Cudo is not database-driven. By promoting the Merchant and their Offer on TV and through ninemsn – Australia’s largest portal – Cudo provides a fresh new audience to each offer, resulting in around 30% or more of the vouchers being sold to new Cudo customers who came to Cudo specifically to trial that Merchant’s offer.

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That said, Cudo has a market leading audience too, both in terms of its member base (more than 500,000 members)and it’s regular visitors, ranked number 1 with 788k visitors in December by Nielsen NetView. We also lead the market when Net Revenue is measured, a critical, long term measure of a businesses’ sustainability. And lastly, and most importantly, we lead the market in Merchant satisfaction, driving the best outcomes for Merchants every day!

At Cudo we have created a new approach to Group Buying, at least two of our key competitors have recognised this and have begun adjusting their model, let’s hope it’s not too late for them, it’s hard to pull-up from a race to zero!

Running cudo.com.au – a Group-Buying startup

Posted on by Billy Tucker

After almost four months of building, launching and now growing Cudo I feel that I have sufficient headspace to return to my blog.

Of course the irony of my last post is not lost on me, albeit I knew at the time of writing it that I was about to begin developing “yet another” Group Buying competitor.

I wrote, “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!”, and since then I have joined the fray with Cudo.com.au, a rather well funded effort jointly supported by my new masters PBLm and Microsoft. And it has been fascinating to watch!

11 or so months in, and none of the Australian Group Buying companies appear to have failed just yet. And like any fragmented marketplace the aggregators are in the mix too, capitalising on the lack of loyalty or differentiation. I expect they will start to lose interest at some point too having failed to build a decent living out of their thin affiliation! But for now, there still seems to be some room in the market as the shoppers keep shopping, and the Merchants keep signing up to their new found one-day wonder-spruik.

Even with all this new competition there’s no obvious downside to Cudo either as enthusiastic new entrants pour oodles more money into Google in an effort to harvest a precious click or two, while educating Consumers and Merchants alike for the greater good.

I still expect to we’ll see some consolidation soon, but for now, it’s 1pm on a Saturday, back to work I guess… Start-up life!