Dealzapoppin' in the Group Buying Space

In the beginning there was Mercata and the promise of discounts from group buying. And there was also ActBig, Zwirl, and C-Tribe. And the market liketh them not. Mercata was laid low in 2001, although its intellectual property would live on.

Today, a new generation of group and social buying sites have sprung up: Groupon, Living Social. And, since it's the Internet, a second (or third) generation. Seattle is home to Tippr, Wrazz, and DealPop. Chicago has YouSwoop. Buywithme is expanding. Whither Groop Swoop, SwoopOff, SocialBuy? One can only wonder.

The largest have millions of subscribers, across the country; the bulk are just starting out, and working a geographic niche furiously, advertising themselves as the way to connect with your city. The shared, cloying cuteness of Internet naming conventions aside, the clock is also ticking for all these second-generation companies as they try to define themselves for customers.

TechFlash already sat down with Tippr for a differentiation chat: They see themselves as a collaborative, deal-delivering platform, less tied to brand recognition than Groupon. We knocked on DealPop's door to see what they were all about.

[Full disclosure: DealPop is a SunBreak advertiser and you should probably subscribe to their email alert service right now. Upper right-hand corner there. Do it.]

Right away what sets DealPop apart is that their downtown Seattle offices are the home of WhitePages.com. Alex Algard founded WhitePages in 1996 in his Stanford dorm room, stealing a march on Baby Bells and their printed phone books everywhere, and today the company has 200 million personal listings and 15 million businesses, with over 20 million monthly unique users. They're now incorporating Twitter and Facebook results into their people searches. They have a top 10 iPhone app.

DealPop is a new product, just a month old, run like a stand-alone start-up from within the company. Customers visit the site, sign up with their email, or follow Twitter to hear about a special offer every other day (currently, that is; there'll be a daily deal or deals in a month or two). They're looking into text alerts, in addition to emails.

The goal is to combine a significant discount with discovery: So far I've seen deals on cupcakes, men's shoes, pizza, perfume, popcorn, and improv comedy in my inbox, almost all at 50 percent off or more.

We spoke with Kevin Nakao, WhitePages' COO, and Travis Pearl, product manager, about how all this works, sort of expecting a version of the infamous SNL "First CityWide Change Bank" skit.

"One of our services is business search, right?" said Nakao. "Find a plumber, find a dentist, find a restaurant." DealPop takes that local merchant relationship a step farther. The company uses search traffic to identify businesses or kinds of businesses that people are already looking for, and uses that information to generate both deals for customers and revenue for businesses.

DealPop is a kind of advertising, but it's not primarily about sending customers to websites to "learn more." It's designed to make sales. "Yesterday I went down and I delivered a check to Market Tours," said Nakao, "and it was nice to say, 'Here's your check,' not, 'Hey, you owe us some money for that ad.'"

Market Tours' Mercedes Yaeger told us she'd come to DealPop after hearing from neighboring businesses. Having had a good experience with Groupon, she decided to give the locals a whirl. Customers bought the voucher online, printed it out, and walked in. 182 tickets sold; because of the price, some bought ten tickets at a time and formed their own tour group. (Depending on the merchant's capabilities, paperless and online redemption could arrive fairly soon.)

Yaeger said she likes DealPop because "they're creating destinations," using the discount not simply to lure bargain-hunters but to entice people to learn about the businesses in their area. She also gave them high marks for their "streamlined" process (for both the customer and merchant), the simplicity of the deal offering, and the resources and guidance they provided her as a small business owner.

"We handle all the e-commerce side, the credit card transactions and fees, and we split the revenue with them," Pearl explained. They have one or two meetings with a business owner, and provide a "redemption kit" which explains how the voucher process works. Part of the ROI for the merchant is the network, Facebook, and Google promotion and advertising that DealPop runs serves of course to advertise the business in general, not just the deal.

DealPop is promoted on the WhitePages homepage through geotargeting placements, and in some cases a specific deal makes it to the page. "We're trying a mix between promoting the service and promoting the merchants," Pearl said.

That's really what brought Yaeger along--though her clientele is likely tourists, she also knows that locals are the ones who choose what they're tourist friends and family do. She wanted a local push to build awareness of her company's tours, knowing that plenty of Seattleites haven't heard of her yet.

That is just what DealPop likes to hear; they're seeking a sense of discovery in the deals they push out. The hoped-for response from customers is, "Hey, I didn’t know about that company, that’s a good price to get involved."

"We want our customers to see that getting introduced a new company, a new event, or new products at 50 percent off is a pretty good deal," said Pearl. In the future, he sees DealPop perhaps moving into mainstream entertainment options like concert tickets, and sports.

They're not quite Wrazz, which has been described as a FourSquare/Living Social mashup, but DealPop is already seeing "social buying" behavior. When they offered tickets to TheatreSports at the Market, they noticed several people buying blocks of tickets first, then inviting their friends on Facebook to attend.

They're joining the party in full swing, Pearl admits, but on the other hand, so long as the deals aren't repetitive of those offered by other sites, there's little cost to people getting email alerts from as many sources as they want. The key will be how well DealPop can do their local business detective-work, and surface deal-driven expeditions for the adventuresome shopper. Or the shopper in need of adventure.