It’s been a pretty good ride so far for digital couponing startup SavingStar. The company launched its beta last August behind $2.3 million in financing from Flybridge Capital Partners, First Round Capital, and Founder Collective, with participation from angel investors like Ron Conway.
The investment saw the digital coupon startup change its name from SaveWave to SavingStar, which it followed up with its official launch in April of this year, backed again by an impressive round, this time $7 million in series B financing from its existing investors, before adding Buddy Media Founder and CEO Michael Lazerow to its Board of Directors in June.
With nearly $10 million in funding and a strong leadership team in tow, SavingStar today added another milestone, announcing that it has surpassed 1 million active users in exactly 230 days, an achievement which its founders are quick to note it made faster than bigs like Groupon, Twitter (over 2 years), or Foursquare (just over a year). What’s more, since launching, over 100 brands, like Tropicana, Huggies, Cambell’s etc. have offered deals on SavingStar, with savings up to 50 percent off. But, cheerleading aside, what is it about this company that attracted this sizable early investment and led to this strong growth?
SavingStar fancies itself — in the style of the times — as the “Groupon for groceries”, or, simply put, a mainstream service that targets the world’s every day digital coupon clippers in an effort to make it easy for them to save money at local grocery stores.
Picking up where many have said that Groupon leaves off, the startup recently launched a loyalty offer that allows users who buy a certain item multiple times at different locations to receive additional cashback on their purchases. This is on top of the fact that SavingStar provides exclusive deals on name brand grocery products, which are linked to shoppers’ loyalty cards at more than 100 grocery and drug store chains, which enable users to save without having to clip or print paper coupons.
Considering consumers spend over $550 billion annually on groceries, thousands of consumer packaged goods vie for customer attention, and newspaper coupon distribution on the decline, SavingStar thinks that its poised to take advantage of customer attention turning to web and mobile-based services not only for deals, but for digital coupons.
The benefit of its model for brands is that brands can promote their products to SavingStar’s audience for free, and the company only charges when a product is actually purchased. It also receives universal product code data from retailers in its network, which then enables it to match offers activated by consumers with in-store purchases linked to shoppers’ loyalty cards — in an effort to help brands close the so-called “redemption loop”.
On the flip side, for consumers, SavingStar is free to use; all shoppers need to do is register their grocery and drug loyalty cards on SavingStar.com or on the company’s iPhone or Android apps. The service then links the offers to their registered cards so that when they purchase items and use their cards, the value of each is deposited as savings into their SavingStar account, rather than at checkout. Once they accumulate more than $5 in savings, users can cash out with a direct deposit into their PayPal or bank accounts, receive an Amazon gift card, or make a donation to charity.
This is where SavingStar believes it can differentiate its service from other eCoupon networks, in that it links offers users select to all of their registered loyalty cards at the same time, as well as enabling users to take advantage of mobile offers. According to SavingStar Head of Marketing Josh Grossman, no other grocery-focused digital coupon companies can make the same claim on a national basis. (SavingStar works with 100+ retail chains nationally, and is the only service that works with loyalty cards from drugstores like CVS and Rite Aid.)
With so much activity in the daily deal and group buying space, it’s great to see a young startup actually approaching digital coupons, a relatively old business in comparison, with a simple yet innovative approach — one that appeals to everyday shoppers. SavingStar is a startup to keep your eye on, as it will be interesting to see if it can capitalize on strong early growth.
For more on the company, check ’em out at home here.