Attack of the Groupon clones – Here comes Snippa

[UK] Now this is getting a little silly. Snippa, another UK-based Groupon clone launches today, this time from two experienced entrepreneurs: Tim O’Shea, founder of Blurtit, and David Hobart, founder of PureContent. The company is self funded by O’Shea and Hobart from their existing businesses, operating with a six person team headquartered in North Walsham, Norfolk.

Snippa, which is focusing on London initially, pretty much follows the usual group buying model: Each day various deals are on offer for things to do in the city, with a minimum number of buyers required for the deal to go through. If not enough people sign-up within the allotted time period then the offer is withdrawn and no money changes hands. The idea is that those interested will spread the word via email and social networks so as to increase their own chances of getting a bargain.

Although it’s here where I’m beginning to question the Groupon model as a whole, whereby the perception may be far more important than reality with the tipping point required, arguably, nothing more than a marketing gimmick designed to make the offers go viral – see below.

Snippa says its main differentiator from the plethora of competitors, including the extremely well funded US-based Groupon, along with others such as Berlin-based MyCityDeal or the just launched UK-based Groupola, is that it runs deals for more than one day, and has more than one deal live at any time. It also claims to have invested more heavily in securing the best deals for its users.

On launch day, the deals on offer include an £80 Super Car experience worth £160 plus a free 4X4 Fun Experience at Vision Motorsport, with a tipping point of 96 buyers. Or a Champagne Afternoon Tea for two for £35 (RRP £60) at Eric Lanlard’s Famous Cake Boy patisserie, with a tipping point of 30 buyers.

So what about the accusation that the Groupon-model is nothing but a marketing gimmick. I’m basing this possibility on the fact that many of the offers being advertised on group buying sites require as little as 25 people to sign up to make the offer stand. That’s not a huge number to back up claims of economies of scale to provide room for a 50% discount. So what exactly is going on?

Naturally, Snippa’s COO Hobart refutes these claims, although he says he can “understand people drawing this conclusion with the current influx of startups into the group buying space, most of whom seem to be operating deals with low tipping points, but in turn the offerings are not deals we would choose to publish.”

In other words, competitors might be using group buying purely as a marketing gimmick but not Snippa – although he would say that: “Tim and I truly believe the tipping point is inextricably linked with the best deal that we can offer to our customers. In our experience the minimum buy-in is in place to protect the merchant more than anything.”

Perhaps more noteworthy to the growing number of UK-based and other European Groupon clones is Hobart’s different experience in dealing with American merchants compared to British ones.

“From my experience with, American companies are more comfortable to experiment with new marketing channels and are happy to operate break even or loss leaders for ‘customer acquisition’. This in turn offers companies like Groupon the ability to get great deals whilst achieving high commission rates. We have found the UK market place is not as open in this respect. In this difficult business climate merchants are reluctant to offer large discounts without the promise of a significant uplift in footfall and a guaranteed minimum return.”

Hobart isn’t saying that the viral aspect is unimportant to the group buying model’s success but argues that from a web user’s point of view, they are just as likely to send an offer on to their friends if they think it’s a great deal regardless of whether the tipping point is set low or high. Additionally, he says, in the UK Twitter seems to be much less significant at this stage.

“… a Twitter search for a Groupon deal vs any of the UK clones reveals a large difference in tweet volume, the UK deals are not getting as many Retweets. I think time will tell if the reason for this is the UK isn’t so addicted to Twitter yet or that the current UK deals just aren’t that attractive.”