Google launching Groupon competitor
You're probably thinking: Gosh, you know what I REALLY NEED right now from the Web? Yet another site that wants to send me daily deals on everything from discounted pedicures to half-off prices at the local deli.
Well, folks, you're gonna get it: Multiple online news outlets are reporting that Google is planning on launching a Groupon competitor. Google failed at buying Groupon so apparently now it's introducing its own service to try and kill it.
It reportedly will be called "Google Offers."
The mad race for Google, Groupon and other big companies is for the local advertising market. Some big companies want to be the ones to crack the hyperlocal advertising and deals market, because it's worth potentially billions and no one's really tapped it on a grand scale.
Despite Google's failure at buying Groupon (for a reported $6 billion, I think), I would expect to see some major consolidation in the market in a year's time. There are, my guess, scores of Groupon clones out there, including a local one in Baltimore called Chewpons.
Hit the jump for the story I wrote about Chewpons in December.
Chewpons wants a bite of restaurant daily deals
Baltimore website starts local service for restaurants and consumers to compete with national players
December 7, 2010
Adam Marks is founder of Chewpons.com, which sells discount coupons for local restaurants. A portion of his sales is donated to charity.
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Luring customers to his Little Italy restaurant in a tough economy has been a top preoccupation for Tony Gambino, owner of Ciao Bella. Most advertising is expensive and has upfront costs, so Gambino has turned to what is becoming one of the hottest new marketing tools: the Web-based daily deal.
It's a business model made famous by websites like Groupon, which send out daily deal announcements to e-mail subscribers who are hungry for deals and savings.Enter Chewpons, a Baltimore-based firm that launched last week. It's the latest competitor in a growing industry brimming with local and national players - and one Gambino is keen on using.
"The economy is down in the dumps; advertising is expensive," said Gambino, who sold more than 50 Chewpons coupons, which pitched $40 worth of food for $20, since last week. "It's a more affordable, more feasible way to advertise. It brings revenues in and gets people here."
Chewpons partners with local advertisers - mainly restaurants - who offer discounted coupons for deals that typically range from 50 percent to 90 percent off. Consumers can subscribe to the daily e-mails, follow Chewpons on social media websites, and share the deals with friends for additional savings.
One twist that Chewpons founder Adam Marks uses to differentiate it from competitors is that a small percentage of each customer's daily deal purchase goes to a charity. The charity can be chosen by the restaurant, or the money may go to Chewpons' "house" charity, the Maryland Food Bank.
Marks, a 44-year-old sales and technology veteran based in Reisterstown, believes Chewpons will attract more people who are looking for good local restaurant finds, but who are also attracted to the charitable aspect of the site.
Consumer interest in daily deals for restaurants is coinciding with a national uptick in the restaurant industry. The National Restaurant Association's Restaurant Performance Index rose to a three-year high in October. Restaurants experienced higher same-store sales and customer traffic in October than in previous comparable periods.
At the moment, daily deal websites are a hot topic in technology, marketing and investor circles. Groupon reportedly turned down a $6 billion acquisition from Google and could go public next year. Another large competitor, LivingSocial, recently received a $175 million investment from Internet retailer Amazon.
Groupon, LivingSocial and now Chewpons are pursuing relationships with local businesses and consumers. Google, Facebook, Amazon and other big Web businesses have long sought to make deeper inroads into local advertising markets for revenue growth.
Marks trademarked Chewpons five years ago and initially ran a Web-based coupon-printing business. But as the daily deal industry heated up over the past year, Marks shifted gears and re-launched the website as a daily deal competitor. The service is focused on the Baltimore area, and eventually will offer deals to customers in other parts of Maryland and perhaps nationally, he said.
Chewpons is staying focused on restaurants, whereas other competitors focus on a broader range of deals from retailers and service providers.
So far, Chewpons has offered daily deals from Ciao Bella in Little Italy, Jilly's in Pikesville and Mr. Charles Market in Owings Mills.
Chewpons keeps about half the upfront cost of the deal, which is common among daily deal sites. For instance, if a customer buys a $20 coupon for $10, Chewpons will keep $5, a small percentage goes to charity, and the rest goes to the restaurant.
"This is starting in Baltimore," said Marks, who has a handful of employees. "This is a local business supporting local businesses and local charities. This is Baltimore. Our goal is to build and own this state."
Groupon sets a minimum limit for daily deals to encourage group buying and the spread of the deal through social media channels. At Chewpons, however, there is no minimum limit for customers to take advantage of a deal.
Restaurants, however, can limit the number of coupons that are available. Marks said that restaurants are attracted to such deals because they can get customers in the door who will likely bring others with them, and spend more money.
"When he presented it to us with the percentages and numbers, it seemed like a pretty good way to get people into the restaurant, to get some business here," said Gambino, from Ciao Bella.
Groupon, LivingSocial and similar companies already operate in Maryland. But Marks thinks his local company can compete with them.
"The goal for Chewpons is to build its [e-mail] database as large as possible," Marks said. "If the database is large, then it becomes a numbers game. You can compete with Groupon."
This is an archived version of the technology blog. For updated coverage, see the current baltTech location: baltimoresun.com/balttech