If you’re not familiar with young British entrepreneur Mark Pearson (and you don’t remember the diary piece he did for us last year), you’ll probably know his business: MyVoucherCodes.co.uk is now the most popular site of its type in the UK, saving punters £50m last year. But not content with making waves in one market, he’s now trying to make a splash in a related area: group buying. The idea is that if you can get enough people to sign up to a particular deal, they all get a juicy discount. And judging by the concept's success on the other side of the pond, there’s plenty of money in it…
Pearson’s new site, Groupola.com, is basically a slightly different spin on the discount voucher concept. Apparently every day it will feature a different deal in each of the eight UK cities in which it has been launched – this may be from restaurants, retailers, theatres, leisure providers, or whatever. If people sign up in sufficient numbers, the company concerned will supply an agreed discount – usually 50-90% off the full price. But if there aren’t enough people, the deal doesn’t happen. (He’s launching it by offering a reduced price flight on a Virgin balloon and a free copy of Richard Branson’s autobiography, but don’t let that put you off.)
Given Pearson’s success with MyVoucherCodes – which also gives him a huge potential customer base for this site, since most will presumably be interested in this idea too – you wouldn’t bet against him making a success of it. What’s more, the timing seems good: everyone’s keen to get stuff on the cheap at the moment, while social networks like Facebook and Twitter make it so much easier to spread offers like this virally. It also provides a clear benefit for businesses that participate: by selling in bulk, they can afford to offer good discounts, while getting a marketing boost at the same time.
As you’d expect, Pearson isn’t the only one to have cottoned on to this. There are several sites offering a similar service, most of which tend to be locally-focused. But the biggest beast in the jungle is US site Groupon: it’s apparently on course to make $100m in merchandise sales this year, and according to TechCrunch, was valued at $250m in its latest funding round (where it attracted some top VC backers). Groupon already offers deals in London – as does German site DailyDeal. But they’re still pretty low-profile: Pearson will hope that his plan to hit eight big UK cities at once will help him jump the queue.
In today's bulletin:
RBS faces bonus backlash as losses hit £3.6bn
Slump in business investment hits recovery hopes
British Gas feels the heat as profits jump nearly 60%
Ganging up to get a better deal
Turn up the heat with corporate speed-dating