The company has dramatically increased its UK headcount to around 400, and is using its 6m daily reach to lure in retailers including American Apparel, ASOS and The Body Shop.
It said the deals were becoming increasingly popular with major brands that see it as an alternative to traditional marketing channels.
Last week ASOS launched a deal on Groupon in which customers could buy a voucher worth £20 for £9. The deal was capped at 50,000, which it sold in under two days.
Rajen Ruparell, director of Groupon UK, said, “The deal isn’t about driving traffic but offering an alternative form of marketing to TV or press. Only 50,000 bought the ASOS deal but the reach of the email is over 5m, which is more than newspapers or even most TV shows have access to.”
American Apparel ran a Groupon deal in the US, UK and Europe and sold about 160,000 deals worldwide. Ryan Holiday, head of marketing at American Apparel, said Groupon’s scale was the key reason for its working with the group-buying site.
“The number of people who see and receive the Groupon email is a huge part of the deal for us,” he said. “The day the offer ran in the US turned out to be the highest traffic day our website has ever had. To accomplish that via traditional advertising would have been impossible or insanely expensive.”
Ruparell said that a year ago Groupon didn’t suit bigger brands but its growth in users meant it now does. “It’s still early days as local deals are still the core ethos of our model, driving people to their local businesses,” he said. “However, the idea of using us for marketing is being realised because we have the scale. A year ago we only had a few hundred thousand signed up and in the UK office we only had two or three people; we now have 400.”
ASOS declined to comment on its Groupon deal because it was too soon after the offer launched.
The Body Shop also launched a deal in the UK last month, driving customers in store with a voucher for £30 worth of Body Shop items for £12. It said that while it had a good response to the deal, it couldn’t tell the effect it had on its high street stores this early. Groupon said it would now be reaching out to more high street brands but would only focus on those that fit with its audience.
Ruparell said the biggest challenge for Groupon is maintaining customers’ interest in the deals they receive in the emails each day. “No one can predict the deals they get. It might be ASOS one day and a restaurant down the street the next. We need to maintain the excitement of getting that email every day,” he said.
Groupon rival LivingSocial ran a deal in the US for Amazon last month, selling over 1.15m $20 vouchers for $10 each. It said that while it hadn’t yet signed such a significant brand deal in the UK, it anticipated a lot more over the next three months.
Peter Briffett, MD of LivingSocial UK, said scale also came from deals that are then shared on social media. “There’s huge potential to drive word of mouth for a brand with this,” he said. “On the day of the Amazon deal there were more than 185,000 mentions of it on Facebook. We’re starting to talk to more brands in the UK as the ability to serve national brands is here now. We’ll see a lot more in the next three to four months.”
Joanna Lyall, partner for digital at Mindshare UK, said the cut group-buying sites take plus the heavy discount may lead to a loss, but that brands add value via earned media.
“For ASOS, offering £20 vouchers could work because it’s likely a lot of people will spend more than that,” she said. “It has also been one of the more innovative retailers, so it’s not surprising it has experimented with group buying. Gap’s deal with Groupon in the US resulted in great PR stories of people queuing outside, so sites like Groupon can deliver value from earned media.”
This story first appeared on newmediaage.co.uk