Groupon and its rivals: why discount sites are getting big

You know the way things are cheaper if you buy in bulk? It’s how most shops make money – buy a lot cheap then sell one-by-one more expensively. But web technology makes it possible for bulk prices to be delivered to individual consumers. So you may not want 100 t-shirts – you just want one – but if you can use the internet to find 99 other people who also just want one, then you can buy 100 at a reduction and all get the cheap bulk price. Geddit? Makes sense.

That’s the logic behind Groupon but it applies to everything from massage parlours to restaurants and it’s all location based so cities have individual sites. It arrived in London recently it’s already caused a media storm and generated a load of competitors.

Why is it getting big?
Well
1) it’s selling stuff for cheap (discounts are between 50-90%) everyone likes that.
2) it’s simple: there’s a new offer each day, if you’re not interested, you just check back the next day to see the new one. No floundering around looking for stuff on site
3) viral spread is built into how it works. You don’t just wait for 49 other people to sign up to a deal, you actively promote the site and the deal by sending the offer to your friends.

Groupon’s UK rivals
Groupola – spotting the market in group-buying discounts, this site launched in 8 UK cities simultaneously (currently the others only cover London) substantiating its claim to be the biggest group discount in the UK.

Likebees – Likebees USP is social networking. They say “is a new and engaging way of discovering, experiencing & sharing the coolest things to do in town with friends, while saving money. It is a Group-buying website like Groupon but will soon introduce more social features.”

MyCityDeal – a Berlin-based site that just launched a London version. It pretty well replicates the Groupon model featuring “one daily deal on the best stuff to do, see, eat, and buy”.