Donnahill's List: Buy With Me

• Launched 10 months ago, BuyWithMe already sees 110,000 visitors per month (according to Google Ad Planner) which is impressive for a site that’s been around for less than 10 months. Impressive until you find out that 18-month old Groupon receives 5.1 million. How do you grow a website in a market where the leader has an 8-month head start, deep pockets and first mover’s advantage?
• From what I’ve seen, the quality of their clients is similar to our existing clientele. There’s a lot of crossover, which is a good reflection. We want people who return, not just people looking for discounts,” says Ahn, who was also approached by Groupon but decided to go with BuyWithMe instead.
• A quick search turns up a review on Yelp that shows that it’s a position that works for consumers as well.

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• osted on November 1, 201
• Beginning today, the discount site BuyWithMe is officially a part of Gilt City, which purchased the flailing company (they laid off half their staff last week) for $5 million.  As daily deals sites first proliferated, the question arose as to whether they would or could all survive.  Is Gilt City’s inexpensive acquisition of BuyWithMe — which had originally raised about $20 million in venture capital — the beginning of the end?
• In all likelihood, it’s not the initial domino in the business model’s ultimate demise.  Instead, what the sale might indicate is the first big downward shift in the daily deals market, toward fewer of the businesses altogether — but not their total disappearance.  What we might end up with in the not-too-distant future is a more concentrated mix of the most prevalent companies (Groupon, LivingSocial) alongside smaller, far more specialized, and with any luck, profitable coupon sites (Goldstar, BTreated).
• It’s been argued before that the daily deals market was getting totally oversaturated, and that some of the sites would inevitably shut down.  BuyWithMe’s fire sale might just represent the first disappearance of the model’s less successful players.

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  Do your coupons align your concept with the best friends of your  potential customers? Probably not. But that's what group-buying startup BuyWithMe is aiming to do with its revamped b
• Do your coupons align your concept with the best friends of your  potential customers? Probably not. But that's what group-buying startup BuyWithMe is aiming to do with its revamped business model.
• You may have heard of BuyWithMe, one of the top three group-buying platforms, like higher-profile Groupon. The model has customers opt-in to e-mail lists where the aforementioned companies send them discount offers for local businesses, helping the latter get new exposure. But unlike Groupon, BuyWithMe spokespeople say, the younger company is making some changes to make its model more niche.
• The promotions will soon be more malleable than Groupon's standard offer of 50 or 30 percent off a local business. That flexibility is key to the brand's new strategy. For example, brand managers are looking to unveil months-long VIP passes for a suite of premiere business deals in specific areas, like the Hamptons. Upper Crust Pizza's specific collaboration with the company involved different, staggered promotions for five of its Boston locations. Each of them have sold approximately around 700 vouchers for each, Piazza said.
• Stone Hearth's promotion was engineered to encourage repeated trial from new customers. The basic promotion was a $15 coupon worth $30, but customers could buy up to five and put them on gift cards to use over time.
• So far, the company is only based in 20 cities, as opposed to Groupon's 60-plus. But they require at least one employee to be "on the ground" in each, according to Joyce. The company is in "aggressive expansion mode," she said, but that won't affect its "intimate" edge.

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• The average deal price on BuyWithMe is around $30 to 35, which is up from the mid-$20 range just a couple months ago. Even after the discount, which is typically 50 to 70 percent off, the local merchant splits the 35 to 50 percent of the remaining revenue with BuyWithMe. While that doesn’t sound like a great deal for the merchants, most of these deals are for excess, unsold, perishable inventory such as classes, restaurant reservations, or other services. It is really more of a marketing opportunity for local businesses to get exposed to new customers and get people to come into their shops who otherwise wouldn’t think of it.
• “It is an extremely profitable business model,” notes Rosner. She is plowing all her cash back into the business right now, however. BuyWithMe was founded only a year ago in May, 2009, and already employs 52 people. A BuyWithMe sales rep personally visits each merchant that runs a deal (building a local marketing business, even one online, requires a lot of legwork).
• BuyWithMe is the premier group buying website where leading local merchants offer exclusive limited time offers to members of the BuyWithMe community.   Through the power of its numbers, BuyWithMe negotiates handpicked group discounts for its customers to access at spas, restaurants, health clubs, bars and other local activities in their city. BuyWithMe currently publishes daily deals in 12 major DMAs, including Austin, Boston, Chicago, Dallas, Houston, Los Angeles, Philadelphia, Phoenix, New York, and San Diego.  BuyWithMe is...

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• “We are thrilled to be able to accelerate our growth strategy with the   Bain Capital Ventures investment,” said Cheryl Rosner, CEO, BuyWithMe.   “Community buying is a significant trend that is transforming online   purchasing. Our business model has already proven itself to be extremely   successful in harnessing the power of local communities. We believe that   Bain Capital Ventures is the right partner to support the next phase our   growth strategy.”
• “BuyWithMe,   with its visionary management team and superior product offering, is   pioneering social commerce and redefining the space. We look forward to   being long-term partners with a company that has massive growth   opportunities ahead.”
• “We’ve followed the social buying phenomenon, and this investment   underscores our view that social networking and community based activity   will drive and define the web’s evolution in the years ahead,” said   Jeffrey Glass, Managing Director of Bain Capital Ventures. “BuyWithMe,   with its visionary management team and superior product offering, is   pioneering social commerce and redefining the space. We look forward to   being long-term partners with a company that has massive growth   opportunities ahead.”

• th a company that has massive growth   opportunities ahead.”

    

    “We are thrilled to be able to accelerate our growth strategy with the   Bain Capital Ventures investment,” said Cheryl Rosner, CEO,
• “We have a   deep commitment to the development of our brand and plan to use the   investment from Bain Capital Ventures to further enhance our technology   capabilities, supplement our team with more top talent, and accelerate   our plans to be in 20 markets by the end of 2010. The investment will   further increase our ability to stimulate local economies, and enable us   to create valuable and long lasting relationships by connecting leading   local merchants with savvy shoppers.”

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• Buywithme, like rival Groupon, combines the power of online shopping with social media.
• Buywithme differs from Groupon in that its deals are available for a week rather than 24 hours like at Groupon. Since a new deal is introduced each day, that means multiple deals are run simultaneously at Buywithme. The intention is to prevent any buyer's remorse stemming from impulse purchases, that might then turn people away from the site.
• Founder and CEO Andrew Moss, 34, also emphasizes developing ongoing relationships with merchants. "Clients should want to offer on our page repeatedly," he explains, saying that only then can the deal truly be considered a win.
• And Moss resists the coupon moniker. "We don't use that word. We are selling vouchers," he says. "Our subscribers are people with an interest in trying things, not just coupon clippers." This is thanks in part to a deal inked last October with The New York Times Company's (NYT) Boston.com, wherein Buywithme "powers" the news site's daily deal.

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• BuyWithMe is a group buying website allowing consumers to leverage group buying power to get large discounts with local merchants. The company is headquartered in New York City. Funding was obtained via a group of angel investors. BuyWithMe's first market was Boston, where restaurants including UFood Grill, Sel de La Terre and Stone Hearth Pizza were initial customers. San Diego and Washington DC^[1] followed. As of October 2009, BuyWithMe serves 9 markets and has currently ~150k unique visitors per month according to compete.com. BuyWithMe's major competitor is Groupon.^[2]
• BuyWithMe introduces one new deal every day in each of the local markets it serves. The deal is mailed to all local BuyWithMe customers, made available on the company's website and distributed through a network of group buying media partnerships. The deal only completes if a minimum number of consumers sign up, therefore assuring the merchant a minimum return.^[4] The value proposition for a merchant is the ability to attract new customers with a one time offer that has minimal impact on its brand equity.