I'm planning on dedicating more time to this topic in the coming weeks, but I thought I would put up a quick post to discuss a major change going on in retail. Social media has made it very easy for people to congregate and form groups of interest (or as Seth Godin would say "tribes"). Currently, those groups are focused more on communication, digital media sharing and product reviews. However, there is a logical next step that is going to change the face of retail, consumer group buying, and recently that movement took a BIG step forward.
Groupon, a high-profile start-up from Chicago, just closed a $30 million round from Accel Partners is now valued at close to $300 million. The company is working with local businesses to provide deep discounts for groups of consumers. The way the web site works, is that you get a deal of the day for the city you live in. The deal of the day will be a significant discount on a product or service (ie. a $100 product for $50). You then have the ability to visit the site and sign up for the deal. However, the deal only goes through if you get the minimum number of people to participate. This volume guarantee ensures that the local business can offer the discount promoted. This is where social media comes in. You now have the ability to tell your friends on social networks about the deal to ensure that it goes through, which in turn also promotes the site to a new audience.
The reviews and press coverage to date has been huge and I think you will see it continue to grow in 2010. Look out for big things in this space in the New Year. This concept of group buying is the future of retail and a perfect example of the power of social. Congrats to the team at Groupon for getting on it early. I'm excited to see where it goes from here. I think you will see this trend show up consistently across all industries - remember, consumers own the relationship in a digital social society.
What do you think about Groupon and the movement towards consumer-group buying?
Comments