Location data can differentiate Groupon

Could brands riding the wave of discounting finally have found some differentiation through data? Location-based mobile app Foursquare has begun distributing deal offers from Groupon, giving consumers the opportunity to redeem them immediately as they are passing by an outlet.

Groupon’s explosive business growth has been mostly based on its first-mover advantage in a sector whose core service of selling discount coupons can be easily replicated by countless clones. It now seems to have stolen a march again by incorporating location-based data with the range and depth of discounts it already offers.

Groupon originally launched its own location-based Groupon Now deals in selected North American cities two months ago, and has now also rolled these out through Foursquare, whose app lets users ’check in’ at various locations and send updates to friends.

Adding location data into the mix makes sense both to Groupon’s customers and its merchants. Customers can look for a deal based on their current needs and circumstances rather than wading through daily offers for teeth whitening and hair removal that verge on spam.

And merchants can directly target people in a specific time and place, rather than at random intervals over the six-month life of a standard Groupon voucher. In marketing terms, it is the digital equivalent of a man with a sandwich board beckoning you into a store.

Granted, Facebook got there before Groupon, but does not appear to have invested much in convincing businesses to come up with offers for its location-based Facebook Deals service.

That might be because, despite the exuberance around Groupon’s potential valuation, it still is not profitable. Both its greatest strength and its greatest weakness is its sales force.

Its geographical spread and established relationships will make it easier for Groupon to execute this move into location-based deals than it would be for competitors seeking to copy it. But while location-based discounts offer Groupon the chance to attract a greater variety of brands, and to learn more about its customers’ movements, they are also going to require more people to negotiate them.

At least Groupon can start by snapping up all the unemployed sandwich board holders.