Guest Post: Groupon clone wars – Who will win the Battle of Britain?

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This is a guest post by Tim O’Shea (Twitter: @timothyoshea), founder of Blurtit, co-founder of Qhub and most recently co-founder of the short lived UK group buying website Snippa. He addresses challenges facing the group buying site market in the UK following the explosion of Groupon clone style startups through his own experience with Snippa.

On a trip to New York in November 2009 I stumbled across Groupon for the first time. The deal displayed for New York seemed too good to be true and despite the obvious active community I quickly closed the page.

However, within a few weeks of my return I revisited Groupon again after reading the first Groupon TechCrunch post and decided that the UK needed this service badly. It appears I wasn’t the only one thinking the same thing! I put together a team with my co-founder David Hobart at the end of 2009 and set about building a business focused initially on London. By March 2010 it was clear that we weren’t going to be able to do what we set out to do in the short term (offer exceptional deals to our customers) and that some of the competition were clearly out gunning us. So Snippa was closed down a few weeks after its launch. In this post I’m going to share what I learnt about the group buying market in the UK at a time when a large number of similar startups are chasing the same goal.

Challenges Facing The UK Group Buying Market

The number of players

Due to the number of players, commission levels are being eroded far from the 40-50% that Groupon achieves down to 0% just to get the deal (at Snippa our deals averaged around 10-20%). Merchants are getting numerous phone calls from prospective group buying companies and the conversation with many is more about the commission level charged rather than how they could offer a great discount for a group of new customers. This will continue until a clear leader emerges that can demonstrate a large customer base allowing them to negotiate better deals and commission levels. Many companies chasing the same deal is counter productive for the end customer.

Market size

The UK does not have the volume of high population cities (compared to the US) so the competition is even more focused on London as the top prize. Throughout Europe there is more scope, but launching in every country with its individual particularities will take a pan-European focused and well funded company.

Starting with no marketing list

There is a good reason Groupon makes you enter your email address before viewing the deals, the size and effectiveness of the email list is key. Any startup addressing their list en mass before putting deals live will stand a far higher chance of success and good funding helps solve this. It is worth remembering that Groupon started as The Point, a platform for collective action, and that members started using the site to organise group purchases.

How To Win The War

Product and distribution. Great product has shown it will spread (see the MyCityDeal film offer below). We at Snippa had hoped to be able to compete with heavily funded competitors by focusing on great product to build distribution with limited expense (in a similar way that Zappo focus budget on customer service rather than marketing). Whilst we managed to get good deals, the killer deal was out of our reach due to the amount of competition, meaning our product distribution strategy was questionable. Moving forward this may change as the number of competitors merge and dwindle. On reflection we should have built the distribution list first.

Distribution is currently being built via email sign up by the following methods: Refer a friend, Twitter, Adwords PPC, PR, affiliate schemes, Facebook fan pages (built by Facebook PPC) and loss leader deals. A large customer acquisition budget is needed ongoing to secure market share.

Leading the Pack

MyCityDeal are clear leaders in terms of current customer base and funding in the UK. Deals such as the £1 film voucher, selling (they claim) in excess of 27,000, has allowed them to buy a large customer base. This deal looks to have been subsidized (at an estimated cost of £125k+) but has been really effective in launching them in the UK. Well funded with an experienced team, MyCityDeal look likely to succeed.

Groupon are yet to launch in London but are amassing email addresses and deals. When they launch, expect their offering to be very strong. No UK startup has been able to build the exceptional branding and community and feel Groupon has achieved. Additionally the lessons they have learnt operating in the USA will give them a clear advantage.

Wahanda seem to have traction in terms of Heath/Spa/Beauty but due to the niche can not go for the bigger cross product offering Groupon and MyCityDeal are after.

Recently launched Keynoir (following a merger with DealBunch) have an experienced team, well known backers and £1.3m funding from Index Ventures and PROfounders Capital. Although it is too early to see if they will gain traction, they certainly have the credentials to do so.

Huge funding or an existing customer base look to be the the features of a successful group buying startup.

And Bringing Up The Rear

Surprisingly, Groupola don’t appear to be selling large quantities despite a massive email list from and a strong company behind them. Others such as Dealmob, Wowcher, Vivavoucher, Mypiggyback are all selling but in small quantities. LikeBees and KGB deals (part of the 118 118 group) are worth watching. To stand a chance of being a market leader, these players need to raise significant funding or need to find a creative way of building a list, such as partnering with someone that already has one.

Predictions For The Future

The UK will have two dominant players, each achieving a smaller market share than the if there was one, thus not achieving the traction Groupon has achieved in the US. MyCityDeal I believe is on target to be the strongest throughout Europe. Any new players coming into the market will need to either have large current distribution or high levels of funding to compete at the top level. There will be space for a number of smaller players if they are able slowly build customers over the next two to three years. A number of niche players (such as Wahanda) will achieve traction, but not at the Groupon deal volumes.

Other Group Buying Opportunities

Group buying in the daily deal format has been proven as a scalable business, as such expect iterations be applied in different formats:

Local businesses with low buy ins: Opening the group buy to a local businesses platform for smaller deal volumes in a self service format. For example, a small local hairdresser wants to fill 5 chairs of unsold inventory on a quiet Thursday afternoon.

Group buying for business services: Many business services have large gross margins allowing for great discounts, thus taking the risk out of working with a new supplier.

Existing communities: Websites (Facebook Pages, Forums, Blogs etc) with an existing community are in a great position to add a group buying feature for their members (imagine if TechCrunch did a group buy on cloud servers!).

What I Would Do Differently

In the rush to launch Snippa we forgot to innovate and iterate significantly, we would have been better off evaluating the competition more throughly and taking action before launching. Ways to compete could have been taking the model to a niche (rather than go head to head against the mass of competition) or alternatively putting resources into finding a novel way to build a customer list.

  • James

    Great article. Just a few mistakes.

    1) The number of sold vouchers that MyCityDeal shows are absolutely fake. MCD does not pay merchants upfront but only after the redemption of the voucher. Using this strategy they can say that several vouchers have been sold (anyway they do not have to pay the merchants for the fake ones) even if the real number is much lower. Then they go to the next merchant to secure another deal using the successful fake numbers of previous merchants. It is also a good strategy to tell the customers that a lot of people already bought so it must be good. For instance they did not sell 27000 for the cinema. They put that number there so people like you believe it and write an article about it.

    2) Vivavoucher is out of the market. They had the same deal for a month now. Mypiggyback is not a serious player. And Wahanda is not exactly a competitor; it is more the yellow pages for Beauty.

    3) Merchants are getting pissed off with MyCityDeal. I have spoken to many and they all say that only a tiny percentage of people who apparently bought the offer are showing up. In addition MCD has a very poor customer service and aggressive merchant relationship. Also the contract that they show to merchants is illegal.

    4) If Groupon comes (and when…) it will be good for small players. It will increase awareness of the industry. It will be easier to get merchants that do not want to wait long to be featured on Groupon.

    Great article.

  • Tim

    James, thanks for you comments, you’re more up to date than me!

    >27000 for the cinema. They put that number there so people like you believe it and write an article about it.

    I know MCD used to have deals in cities that clearly didn’t exist but I thought the film deal was true. Do have proof that this is not true? Clearly not being transparent will not help them.

    I believe Wahanda is worth watching though they have taken the model to a community and that is very interesting.

    • James

      Hi Tim,

      I know this because I have spoken to several merchants that featured a deal with MyCityDeal. Most told me that until then just a very little percentage of the vouchers sold had been redeemed. I have also spoken to former sales people of MyCityDeal and they confirmed that. Also have a look at how their sold number increases during the day. It is usually steady for a while then goes up in a second by a lot of people and that pattern continues. Also as soon as the deal is live at midnight they have already a few people that bought (their deal is always on, no tipping point). And then again it does not move for a while. Check also their Facebook fan page. Users do not comment much. Definitely too little compared to the number they sold.
      If you better analyze their facebook fan page you also see that they have many fake fans. There are companies that you can pay and give you fans (fake profiles).

      I was watching the cinema deal with my eyes. I went to the toilet and when I came back there were 3000 more sold. And then did not move for a while.

      Additionally if you read their standard contract for merchants you will laugh. 1 page. Many clauses are illegal and the exclusivity states that for 2 years the merchants cannot use any other advertisement channels.

      Anyway being funded is the key. There are better start-ups out there but they are not funded. VCs should get smarter and put some money in the small companies. Considering all the money MCD has, they have not done that much. And they are burning a lot of it.


  • MT

    Great post indeed Tim.

    Seems like James is in the sector as well :) I confirm what he is saying about MCD, they only pay for redeemed vouchers, which allows them to make numbers up on their website. Several merchants I’ve spoken to are *NOT* happy about it…

  • Jason Steadmean

    Great article – it’s a big battle now that should play itself out in the next 3 months. My money is on Keynoir, Wahanda, or Likebees.

    • Simi

      Fantastic article. Really interesting points from Tim – how are MyCityDeal getting away with making up figures? Surely the merchants they work with would question why they’ve only had 10 customers if they sold over 300 on the site???

      Agree with Jason – I think Wahanda have got it right by concentrating on one niche area – spa and beauty. Merchants get more than just a one off offer plus they have the community and reviews. Other one to watch is Keynoir, which still needs to prove itself but have the expertise to do it well !!

  • Mike

    I think that the winner will be the one that will have best deals and which will manage to attract reasonable communities from smaller cities to expand their operations. It is not easy to create a group buying community in let’s say Brighton, keeping this community engaged will be matter of really great deals.

  • Groupbuyer

    I do not see the point of your tenacity against MyCityDeal… are you a competitor of them?
    I had actually no idea about how they pay merchant and thanks for pointing it out, I see that paying merchants in this way is very profitable for them (they get 100% of the money and pay only a part of it!), however you have also to consider that voucher usually expire in 6 months or so and merchants should make their balance at the end of the period, not a few days or weeks after.
    Regarding your comment about the fake numbers on the website, I used to work in IT and this could simply be the result of how they have implemented the update function of the results.


  • Question


    I have very simple question – how does the merchant validate a voucher? If I print it put twice will I get discount two times?

    Thanks for the answer!

    • Tim

      The merchant gets a list of all the vouchers and ticks them off as they are used.

      • Question

        So in fact it’s problematic, especially when u sell 1000 vouchers and poor guy has list consisting of 20 pages :)

  • James Franklin

    Good article, I look forward to seeing how this all plays out over the next few months.

  • Chris

    Hey guys,
    I think mycitydeal is the leader in this race. I regard the other comments as pure envy of bad loosers. I think myself having bought a cinema voucher and several other deals I have nothing but respect for those guys. I wish them all the best,


  • Nigel

    I see Wowcher is featured all over Kelkoo. They must be doing something with them. If they are it will make them a very big player in this space

  • Chris

    What’s realy funny is that since this article has been launched groupola has exploding numbers. Suddenly a boring Yoga Deal in Liverpool has 258 buyers. They must be really desperate if they listen to the hear say in here and fake their numbers. I heard quite some stories from people in their salesforce who do not get paid their comission as literally none of their deal have tipped so far. Quite some of their business partners seem to be pissed off as well as they do not deliver the volumes they display on their website. Wonder for how long they can do this…

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  • Liam Young

    I notice from my research Groupola are faking their numbers just to push the fact they are the largest growing UK group buying site – which isn’t true.

  • Carsten Kolbek

    Very interesting article. In Rainmaking we have played around with the group buying concept for 1½ years. First starting in Denmark with group buying of branded physical products. It was a pretty good success until the mother companies of the brands stopped the local dealers to offer heavy discounts. Not legal – but a difficult fight to take …

    We are still testing different group buying formats – including services like fitness memberships. See (will soon relaunch with adapted concept).

    In my opinion there will emerge a lot of different group buying concepts in the future. The market will be segmented and cluster around special niches.

    Currently, too many only focus on discounts and getting volume through heavily funded marketing activities. I think many sites would benefit from looking at how they can create real value for their suppliers/partners. This will be a significant key to long term success.

  • Carsten Kolbek

    I am currently in Vilnius attending a 54 hour startupweekend with 150+ entrepreneurs. More than 30 people made pitches tonight and as usual there were a couple of Groupon clones and look alike – unfortunately not yet with any significant new business model.

    However, there were some other good teams and I hope to come back with some potential candidates for our accelerator program –

  • Peter

    Has anyone else noticed that Groupola has added 100+ sales to all there deals since this article has been added.

  • Peter

    (Sorry I missed all the comments before me about Groupola faking there sales)

    I was going to go in to this space my self but it seems that MyCityDeal are the only people selling a good amount and I know Groupon are planning of launching in the next 4 weeks so I think I will miss this one out.


  • J Lumb

    It’s funny how a few months ago TC wrote an article about how well ‘Groupon’ were doing and suddenly we have x100 clones. This reminds me of the million dollar homepage days!

    Anyway, off to build my Groupon clone…script anyone?

  • Yali

    Why does everyone assume the UK will follow the US model, with one or two players becoming the “Groupons of Europe”? Isn’t group buying just a product feature, that any community site might implement, esp. where the community is based around a specific geography? (E.g. the Evening Standard might use this in London.) A tech startup in the US was the right company to innovate this new business model, but that doesn’t mean a tech startup is the right company to emulate it here.

  • Johann Q

    @Yali: In Germany there already is by the WAZ publishing house, which is essentially an extension for their newspaper WAZ and the portal .

  • Jim

    Well in my opinion mycitydeal is just faking the numbers and their deals are not genuine, i read many forums and found so many complaints about them.

    to be honest i am not in the favour of any group buying website but i would say that i do like Groupola.Com. i bought many deals from them and all of them were genuinue.

    Also is launched by myvouchercodes which gives me more reliability.

    Obvisouly Choice is yours!!

  • Johnny


    I’m sorry Jim but you obviously work for Groupola or MyVoucherCodes as I have heard nothing but bad things about Groupola.

    I even saw a tweet from a top Sky executive saying there customer service is appalling after using them him self and after reading this article I have sat and watched them fake ALL there sales by even adding 300 extra sales to one deal!? come on that is just crazy…

    I’m not saying that you can or can’t trust any of these sites as most of them look legit to me but I know for a FACT that Groupola are faking sales and are just giving start ups in the UK a bad name.


  • Chris

    are there any clones of this in Asia already?

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