Groupon has played a big role in making coupon collecting cool again, but recently, the site has experienced some drama.
Unlike the vast majority of coupon Web sites out there which offer a long laundry list of deals on everyday items, Groupon focuses on bargains for fun activities. Each day, Groupon members in 30 different cities nationwide get one great deal e-mailed to them. In New York, today’s deal is half off a Bollywood dance course, in Los Angeles, the current deal is for half off a set of three gym classes. Besides these, they’ve also offered discounts on ski trips and places to dine out with friends. So far, more than 1.6 million coupons have been purchased since the site launched in late 2008.
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The secret to Groupon’s formula is the idea of collective buying. The deals only go into effect once a certain number of people have signed up to pay for them. This way, users will feel compelled to get friends and family to sign up for the deals as well. In turn, Groupon partners with these businesses and is able to guarantee them a certain amount of cash up front. It’s a win-win strategy for businesses and customers, but there has been one downside for Groupon. The success of their site has spawned a fair share of imitators and, as far as Groupon is concerned, blatant rip offs.
The most recent example of this is SocialBuy. Like Groupon, SocialBuy partners primarily with hospitality businesses to offer deals on a ticking clock and is founded on the notion of collective buying. This might not seem so egregious if the layout of the site itself did not also appear to be an exact replica of Groupon (judge for yourself.) When we brought this site to the attention of Groupon’s CEO and founder, Andrew Mason, he did not seem pleased.
“We have a patent on all of this so everything they are doing is illegal,” he said. Mason told us other sites had blatantly ripped off Groupon’s look and formula in the past, including a little known site called Nopuorg.com, which is actually Groupon spelled backwards. But while Nopuorg seems to be a mostly playful and probably defunct site (we e-mailed their contact and the message bounced back,) SocialBuy is really looking to make a name for itself.
