Google Offers, Google’s competitor to Groupon, rolled out in Portland in June, hitting the New York and San Francisco areas last month. This month Google Offers is available in Denver, Seattle, Boston, Austin, and Washington, D.C.., with Atlanta, Baltimore, Chicago, Dallas, Detroit, and Philadelphia to follow shortly, to name just a few. Not to be outdone, Amazon has rolled out AmazonLocal, in many of the same cities.
Google Offers and AmazonLocal, like Groupon before them, are a sort of “deal a day” service, through which local businesses offer daily deals. Local merchants sign up for a fee to have their deal of the day featured to the services’ users. Put another way – that’s right – businesses pay for the “privilege” of deeply discounting (usually by 50%) their products and services.
If this sounds like a lousy deal for the businesses, well, it can be. Explains Posie Cafe’s owner, Jessie, of their Groupon experience, “There came a time when we literally could not make payroll because at that point in time we had lost nearly $8,000 with our Groupon campaign.”
On the other hand, it’s great for consumers, and depending on which version of their financials you believe, it’s either been really great for Groupon (which would help explain why Google and Amazon are copying the business model), or they have suffered spectacular losses (which is how it looks after the SEC required Groupon to revise how they report their financials leading up to an anticipated IPO).
The model should work for the service itself: retailers offer coupons for up to half-price off their product or service, the consumer pays that 50% to obtain the coupon, and Groupon in turn gives the retailer half of that for every coupon actually redeemed. So, if Dance-o-Rama offers dance classes that normally retail for $100 for 50% off, at $50, the customer pays Groupon the $50, and then if they redeem the coupon, Groupon passes $25 back to Dance-o-Rama. If the customer doesn’t redeem the coupon after purchasing it, Groupon gets to pocket the whole $50.
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However, after the revised financials came in, showing a rather stunning loss of nearly $200 million, it seems that perhaps the model isn’t so profitable after all, leading one to wonder about these:
Anyways, if you want to check them out yourself, here is the full list of upcoming cities in which Google Offers will be operating:
Atlanta, Austin, Baltimore, Boston, Brooklyn, Chicago, Columbus, Dallas, Denver, Detroit, Fort Worth, Houston, Indianapolis, Long Beach, Los Angeles, Miami, Milwaukee, Minneapolis, Oklahoma City, Omaha, Orlando, Philadelphia. Phoenix, Pittsburgh, Salt Lake City, San Antonio, San Diego, San Jose, Seattle, St. Louis, St. Paul, and Washington D.C.
And here is the list for AmazonLocal:
Birmingham, Inland Empire, Long Beach, Los Angeles, North Orange County, San Fernando Valley, San Francisco, San Gabriel Valley, Westside / South Bay, Miami, Palm Beaches, Boise, Chicago, Raleigh, Bellevue/Eastside, Seattle, Snohomish County, Tacoma
You can sign up for Google Offers here.
You can [Page no longer available – we have linked to the archive.org version instead].
You can read Posie Cafe’s full story about their Groupon experience [Page no longer available – we have linked to the archive.org version instead].
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