New Coupon Biz In Town | Groupon comes to Worcester and goes head to head with locally based competitor
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Chicago-based online coupon-purveyor Groupon recently launched a site in Worcester.
For Sam Goldman, owner of Bikram Yoga of Auburn and Westborough, any new customer walking through the door is good news.
So he was understandably enthused when 1,100 people signed up for a 10-yoga class promotion at his studios after he advertised with Chicago-based online coupon-purveyor Groupon.
“I barely do any advertising, so Groupon is great,” Goldman said. “It’s a great way for businesses to save on their advertising budgets and improve their bottom line.”
Groupon launched a Worcester-region deal of the day in mid-December and already some local businesses are realizing the benefits of “social commerce,” as the coupon company calls it.
For other local businesses that run competing online coupon websites, including Worcester-based The Local Deal, Groupon’s entrance into the Worcester market is met with some trepidation, but confidence that there are enough frugal customers out there searching for deals on multiple websites in town.
The Tipping Point
“Everyone’s always looking for a deal and everyone is always online, so it seems like a perfect fit,” said Eric Lindquist, public relations director for the Worcester Sharks, which recently ran a coupon for discounted tickets to upcoming home hockey games.
Lindquist said he expects the Sharks to continue working with both The Local Deal and Groupon to get people into the seats at the DCU Center for Sharks games.
Groupon works by partnering with a business to offer a coupon for their product or service. The deal is advertised on Groupon’s website, through social media networks such as Facebook and Twitter and in daily e-mails that are sent to subscribers. Once a certain number of people sign up for the offer, a tipping point is reached and the deal is on. Groupon keeps half of the revenue generated from the sale of the coupons, which are usually offered for 24 hours.
The tipping point allows businesses to calculate how many coupons must be sold for the deal to still be profitable for the company, explains Julie Mossler, a spokesperson for Groupon.
Goldman, the yoga studio owner, said his Groupon wasn’t necessarily about the deal — he offered 10 yoga classes for $20, which normally retails for $130 — but instead it’s about the customers he hopes to turn into regulars after the 10 classes are up.
“Once they walk in the door, they’re hooked,” he said. “I just need to get them here.”
Groupon started in Chicago in November 2008 with 400 subscribers and has now grown to more than 50 million users in 37 countries. Groupon’s had a Massachusetts presence, in Boston and Springfield.
For fixed-price, volume-based businesses, Groupon seems like a natural fit, according to Goldman.
The College of the Holy Cross’s athletics department recently ran a Groupon promotion to sell tickets to five home basketball games that occur during the students’ winter break. Jennifer Whipple, the athletics fundraising coordinator, said she noticed other school athletic departments offering the online coupons through deal websites and thought that during the winter break when the stands are a little emptier would be a perfect time to sell the buy-one-get-one-free coupons. The school has sold more than 100 packages for upcoming games.
Tower Hill Botanic Garden in Boylston had similar success with a Groupon promotion, selling more than 500 discounted admission tickets.
Established Competition
Groupon is not the only online coupon distributor in town, however.
Tom Breen started The Local Deal in November 2009 after working almost two decades in small business marketing. He said the growth in the online coupon industry over the past two or three years has been amazing.
“Just a few years ago there was very little online shopping, now I think everyone feels a lot more comfortable doing it,” he said. “It’s just becoming the norm.”
Breen said he’s not worried about Groupon coming into the market because his business has its own identity in the local community.
Groupon sells mostly local deals but some national coupons are sprinkled in every once in a while, according to Mossler of Groupon. The company’s most successful local offer so far has been to Wild Willy’s, a restaurant chain with six locations in Massachusetts, New Hampshire and Maine.
Other businesses say they’re happy sticking with The Local Deal.
Lindsay Mastrototoro, marketing coordinator for Uno Chicago Grill in Millbury, met Breen at a chamber of commerce event and said she likes the idea of working with a locally owned business like The Local Deal. The store offered customers $14 worth of food at the restaurant chain for $7.
“I think it’s important to support other small businesses,” she said.
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