Aggregators step in to sort out growing ‘group-buying’ market

By Chris Hogg

Today, group-buying is all the rage online, with huge discounts offered in cities around the world. However, as copycats crop up each day to cash-in on the trend, it’s increasingly difficult for consumers to follow everything.

Group-buying online allows consumers to group together to get better deals or discounts when purchasing products or services. Using various new websites, consumers are given deals by email and the only catch ? and the reason why group-buying has been so successful ? is a minimum number of people need to buy the deal for it to become official. In order to hit the minimum numbers, consumers often encourage their friends to get in on the deals by sharing details of each deal through social networks such as Twitter and Facebook, ensuring the minimum numbers are met and helping companies to grow. It’s an ideal business model because everyone wins.

Getting deals online shows no sign of slowing down. It’s backed by hundreds of millions of dollars in venture capital, it’s spreading into virtually every major market, and media companies are jumping in and acquiring start-ups.

The king of group-buying is still Groupon, a two-year-old Chicago start-up that has been called the fastest-growing company in Web history, generating an estimated $500 million in revenue this year.

This week Facebook also announced it was also getting into the business with the launch of the Facebook Deals platform.

Depending on the city you’re in, the list of companies that are emerging to offer group-buying can be dizzying. In Toronto, for example, there are at least 24 companies offering discounts on merchandise, restaurants, laser hair removal and more. There’s Groupon, Teambuy, LivingSocial, WagJag, to name a few.

The group-buying game has also become so niche that there are sites set up for sections within cities; in Toronto, there’s a site targeting people who walk through a large underground walkway called “PATH” and deals only come from businesses within the underground.

The explosion of daily deal sites leaves a lot of opportunities for consumers to save, but it can also be challenging to navigate through the dozens of local sites to see if one has a better offer than the other. And if you’re not interested in the yoga offer from one company, you may be interested in the restaurant discount from another. But who has time to visit dozens of group-buying sites to check out the deals?

That’s where Deal Page fits in, a start-up aggregating start-ups. With a quick glance, visitors can see every deal being offered in a particular city, all at once.

Founded by 22-year-old Wes Bos, Deal Page aims to provide a one-stop shop for everyone looking for deals in their region. The site was launched at the end of September and Bos says it’s expanding quickly just through word of mouth. It’s available in Canada only right now.

“Traffic is currently around 1,200 daily visitors and growing each week as people tell their family and friends,” Bos said in an email interview. “I love to create things and this was an excellent side project that I could continually improve on. I’m a Web designer and developer, so taking a break from client work to hack away at something like this has been really nice.”

Bos’ side project has grown from a Toronto deal page to catering to visitors in 11 cities across Canada. As the site gets more interest, Bos says he’s looking to expand.

“I just brought on another guy to work on the site with me, so we’re planning on launching in a lot more cities with support for RSS, email and mobile,” Bos said. “Right now we’re focused on Canada but looking at the United Kingdom, Australia and the United States to see what would be best to get into.”

So what’s in it for Bos? In addition to providing consumers with a website that lets consumers see all city deals in one place, Bos can also earn money by referring people to each service.

“My first group buy was for a coupon at a local pub,” Bos said. “I bought it and then shared the link on Facebook. A few days later I logged in and was surprised to see I made $40 [in referrals]. So once all these sites started to pop up, I was getting more and more email and I thought about creating a page that pulled in all of the latest deals in Toronto.”

Deal Page was created using publicly available data group-buying sites provide in order to spread themselves among the developer community. Using their APIs and what Bos calls “some secret sauce PHP scrips that run every few hours,” the site essentially creates itself dynamically using data provided to it.

Bos says he can put together a new deal page for a city in about 20 minutes or so, depending on what data is available.

With the rising popularity of these discount-deal sites, group-buying aggregators such as Deal Page are also increasing in popularity and Bos is not alone in the industry. DealGator and CakeDeals, to name a few, offers similar services.

“There are about 130 daily deal sites in North America right now,” Simon Wong, co-founder of CakeDeals, said in an email interview. “It was very inconvenient to visit multiple deal sites or to receive multiple emails every day. In order to make our own lives easier, we made a simple aggregator that allowed us to see all the deals in one place.”

CakeDeals launched a month ago around the same time as Deal Page and has attracted 10,000 visitors to the site in the last month. The company is running in 13 cities, including seven in Canada and six in the United States.

“One of the interesting use cases we discovered was that our users would subscribe to a foreign city before visiting it,” said Wong. “This way they can start snapping up amazing deals for dining and activities for their vacation. We are in the process of expanding to some Asian cities, such as Hong Kong, Shanghai and Taipei.”

Similar to the competitive group-buying landscape, group-buying aggregators face steep competition from companies who are backed by big money. DailyD, for example, aggregates deals from 53 cities and the company recently raised $5 million in funding.

Deal Page’s Wes Bos says he plans to grow and compete online by focusing on the user-interface and keeping things simple. What the competition is doing, he says, is secondary.

“I am really happy with our layout and user interface, which I’ve heard lots of good feedback about,” Bos said. “When I built the site I had no idea anyone else had one of these sites so I wasn’t influenced by any of them ? I just made a site I would like to see while having my coffee every morning. The sites features are ever evolving based on visitor feedback, so I try and focus less on what competitors are doing and more on what works and makes people happy.”

Bos, who is finishing up his Bachelor of Commerce in Business Technology management at Ryerson University, also maintains a competitive advantage by fostering relationships with owners of group-buying sites in order to make sure he has their sites on Deal Page when they launch.

“We are currently working on some ideas to pull in additional money from sites that want to promote themselves on DealPage,” he said. “It’s a really easy site to convert because people come to the site looking to click.”

[Via Chris Hogg & Digital Journal]