Groupon is valued at something like 30 billion dollars and is preparing for an IPO. They have about 8,000 employees and tons of revenue ($644 million in the first quarter of 2011). Though still reportedly not profitable, they are growing on the promise to generate even more revenue and eventually tons of profit. Shareholders might benefit immensely.
The daily deal model has been replicated by many other services, but none have reached this scale. The market appears to be huge, and even more revenue and profits on the table. It’ll be interesting to see where this all goes.
Then there is a tiny little upstart in Rochester, NY doing daily deals a different way. The deals look very similar – great offerings from local businesses at about half off the normal price. The difference here is that the company’s profit – 90% of it – goes to a local charity.
This creates an interesting dynamic of saving and giving, and changes the value proposition for the buyer and the seller. And it takes local to the next level, by giving back to the community where the business operates and where the buyer lives.
They just launched, and the deals seem to be structured in a pretty straight-forward manner. Maybe more creative ideas evolve from this model. People might pay full price for a “deal” if half the money went to a local charity, for instance. Or, specific deals could be coordinated with specific charities to draw natural correlations (between a school supply store and schools, for instance). Maybe people would even buy a “deal” because of the charity it supports rather than for the product or service itself (like when you eat at a certain local restaurant because a percentage of the take supports a local charity).
Two good ideas
People seem to like a good deal. And people seem to like to do good things. Putting these together seems like a brilliant idea. It’ll be interesting to see how this little corner of the internet evolves.
Photo credit: paulamarttila