Category Archives: Deals

Groupon Re-thinks its Ambitious SMB Platform

Groupon is apparently thinking hard about dismantling its ambitious SMB platform, and refocusing on its core strengths in daily deals, goods and travel. Reports have come out saying that Groupon is offering to sell its Breadcrumb POS platform, which had been rebranded as Gnome; and also sell its interest in Serviz, a Local On Demand Economy home services company that has been developed as ClubLocal by former ReachLocal CEO Zorik Gordon. Groupon has also been in talks to cash in on T-Mon, the South Korean ecommerce service that it bought last year from Living Social for $260 Million, but could now been seen as a cash cow that could allow Groupon to invest in other areas.

According to Bloomberg Business Week, Piper Jaffray analyst Gene Munster thinks that the Breadcrumb part of Gnome could fetch $100 million, and that Groupon’s stake in Serviz could be worth $30 million. T-Mon, which is seen as an ecommerce winner in Asia, could ultimately get as much as $800 million. Groupon’s apparent decision to explore the sale of Gnome is the most interesting to us. A report in Re-Code said that executives casually offered to sell at least a portion of it to Square.

In developing Gnome, which has been built on top of its June 2012 purchase of Breadcrumb, Groupon assessed its widespread, international merchant base and concluded it could reinforce and upsell that base and position itself as a global ecommerce giant. It would do so via a compelling package of highly discounted point of sales devices, payment services merchant analytics and strategically targeted offers to customers.

The investment in Serviz – which gave the greenlight to Gordon’s team to continue developing a service that was not going to go further at ReachLocal – was also seen as strategic as Groupon looked for more and more ways to connect and broaden the local marketplaces. Coincidentallly, it looks like Groupon is giving up on having a piece of the home services market just as Amazon and Google are diving in.

Is Groupon giving up too early? We’ve been impressed with the capabilities of the Gnome platform and the strategic vision behind it. The Serviz product is also impressive, although perhaps too rarified for Groupon, as it aims for higher ticket repairs and services. And separately, T-Mon is going to require enormous investments to grow and maintain its market share in a business that has come to not only include deals but also ecommerce, fashion and services.

The bottom line here, however, is that Groupon may have concluded that its merchant base sees it as a 3rd, 4th or 5th choice for this kind of activity – rather than as a substitute for blue chip and diverse players such as American Express, VeriFone, First Data and Salesforce . While Groupon can always work to keep repositioning itself, it currently seems most secure as a provider of discounted goods and deals that it continues to mold into an always on marketplace.

Thanx CEO Zach Goldstein: ‘Let’s Call Them Card-Linked Services, Not Offers’

thanx

The BIA/Kelsey “Status and Review of Card-Linked Offers, 2015” report, which is based on in-depth interviews with industry leaders, has generated a lot of interest among the various shareholders of card-linked offers and non-advertising marketing solutions (including financial institutions, tech vendors and publishers).

We’re especially interested in the feedback from Thanx CEO Zach Goldstein, who tells us he’d like to see the Card Linked Offer space rebranded as “Card-Linked Services.” The main reason? “There is a lot of value that can be delivered to a consumer by linking their card without receiving and fulfilling an offer,” he says. “In our case, for instance, easier reward accrual for loyalty programs.”

In Goldstein’s view, the report — which is bullish on momentum in the card-linked offer space — could be even more bullish. He’s seeing conversion rates for Thanx campaigns ranging from 22 percent into the low-30 percent range. This is well above the 3 percent to 12 percent conversion rates that we cited as the norm.

Goldstein also takes issue with the report’s conclusion that cashback is the preferred reward type — something that is widely assumed by the financial institutions and related ecosystem, but sometimes disputed by players that focus more on loyalty.

“Many of our merchants would rather sacrifice margin than top-line revenue,” he says. “We actually see far more businesses who like to use card-linked for the ‘accrual’ portion of the experience (tracking spending to qualify) but redeem rewards through a more traditional channel or through mobile.” For more of Goldstein’s views on card linking, click here.

The CardLinx Association, which partnered with us on the report, is going deep on card-linked offers with a great lineup of speakers in New York April 28. We hope to see you there.

New BIA/Kelsey Report Shows Momentum for Card-Linked Offers

BIA/Kelsey is out with my new paper on the status of card-linked offers, which is based on detailed discussions with 14 leaders of the card linking ecosystem, including credit card firms, tech vendors, payment processors, publishers and merchants. Most of the respondents are members of The CardLinx Association.

This week, I presented report highlights to The CardLinx Association’s Mobile Summit in San Mateo. Among the findings: universal agreement that card linking is seeing momentum among merchants; that some budgets for card-linked offers have begun to move from experimental to seven-figure spending; and that many key categories are participating, including Quick Service and Fast Casual restaurants, specialty retail and subscription services.

Challenges remain, however. Once seen in simple terms as a successor to the prepaid model pioneered by Groupon and Living Social, there have been some slow-downs in the business. As Coupons.com SVP Bruce Sattley noted at The CardLinx Summit, “There is not as much fervor among retailers as I would have thought a year ago.”

Clearly, the ultimate success of card-linked offers will be linked to better coordination among the various segments of the CLO ecosystem; the development of a constant stream of attractive offers; greater awareness of CLOs; the elimination of structural sales blockages; and the development of industry standards for card-linked transactions.

More information about the report, including purchase information, may be accessed here.

CardLinx Summit: Facebook Eyes Role in ‘Unlocking Commerce’

Facebook isn’t often thought of in terms of “commerce,“ a la retailers such as Amazon or financial institutions such as American Express, but it makes a strong case for itself as a company that “unlocks” commerce. Speaking at The CardLinx Association’s Mobile conference in San Mateo on Feb. 24, Facebook Head of Payments and Commerce PJ Linarducci joked that his “day job” is “collecting (payments) from two million advertisers a month to help them connect with their audience.” These involve payments in 55 currencies, with 800+ payment methods. One million transactions take place daily.

Is there is a clear link to commerce from Facebook’s base in advertising? Linarducci thinks it is fairly obvious. “Commerce is about information,” he said.

With placement on 95 of the world’s cellphones, and detailed profile and usage information on its users, commerce also extends the company’s broader social mission. “Payments are just a point in social; helping people get what they want,” Linarducci said. He suggested that many marketers might post offers instead of ads, if given the opportunity.

While Facebook does not appear to have moved forward with several tests involving virtual gift cards, prepaid deals and virtual credits, the company is actively exploring all its commerce options. For instance, it is currently highlighting buy buttons attached to ads, and classifieds for groups.

The big picture is to look at Facebook in terms of its access to audiences, its payments infrastructure and as providing world class tools,” said Linarducci. And commerce is happening on the site whether Facebook is directly involved or not. “People hack around the system to make commerce on Facebook — despite us not doing anything to help them,” he said.

Facebook’s PJ Linarducci

LevelUp Teams with Sprint for Billing: Will Carriers be the New Local Billers?

More than 15 years ago, telecom carriers seemed like the logical candidate to handle ecommerce and other third party billing. But high commissions as high as 30 percent ruled them out for handling most billing accounts, after a fast start with porn and other services.

Now, Sprint is re-entering the third party billing arena and will compete with credit and debit cards via its Pinsight Media mobile ad network. The #3 U.S. wireless carrier with 50 million subscribers, has signed a deal with LevelUp to be one of several processors of its bills.

Customers who choose to pay with Sprint at any of the 14,000 merchant locations that take LevelUp will receive a 10 percent rebate as an added incentive. Those spending $100, for instance, will get $10 back.

Speaking at Money2020 this week in Las Vegas, LevelUp Founder Seth Priebatsch said the advantage of teaming with Sprint is that it is “frictionless” and “easy to set up.” The ace in the hole is working with Sprint’s ad network, with is working with 150+ enterprise apps. The ad network can boost restauranteur and retail affinity and allow for users to target based on geo-location, demos, interest/social profiles and LevelUp App Usage.

Sprint is the only mobile carrier who can provide fully integreated mobile ads with carrier billing,” noted Priebatsch. He would not comment on what LevelUp will pay for Sprint billing, although costs will likely be partially defrayed by the use of the ad network.

Groupon Seeks Industry Partners; Wants to Close the Loop for Merchants

Forty percent of merchants run some kind of “special” sales or promotions according to a Groupon survey of 25,000+ merchants. Half of the specials are offline, “trapped” on chalkboards and menus, noted Groupon VP of Marketplacest Dan Roarty, who was speaking at Money2020. “There is no aggregate source for them.”

Roarty said that the company, as part of its Local Operating System, has been working “to close the loop” via its G.Nome payments and loyalty system. Among other things, G. Nome provides a seamless redemption of deals, specials, coupons; automatic requests to leave feedback; and “automatic goodies” for being a great customer.

Many other elements are required to really close the loop, however, said Roarty. Groupon is currently soliciting help from partners who can enhance its efforts to provide payments, Point of Sales info, Geo Fencing, Wifi and Beacons. “Groupon can uniquely blend all these signals and put customers in control,” said Roarty.

First Data Adds Beacon Technology to its Perka Loyalty Solution

First Data, the payment processing giant, has been building up a suite of services that would take the company far beyond payment processing and inject it squarely in the middle of SMB marketing.

The suite as currently configured includes the Clover Point of Sales system; Insightics analytics of transactions; Gyft virtual gift card services; and Perka, a sophisticated loyalty program for SMBs. Each of the services works independently, but are also increasingly integrated as well.

Perka was purchased by First Data roughly one year ago; in tandem with First Data’ purchase of Clover. Competing with Belly, Five Stars, SpotOn and other loyalty services, Perka now has over 1,000 merchants, and has recently increased its monthly fee for new customers from $50 to $59.99.

Co-founder Rob Bethge recently talked with BIA/Kelsey about the service’s progress under First Data – a sale which Bethge says has given it a chance to scale on a global basis– technologically and commercially – much faster than if it had been a standalone company.

Bethge says the company is just now “commercializing” with First Data’s various channels, including the use of up to 1,700 First Data sales reps of various stripes reaching out to SMBs. The service’s latest feature is the addition of proprietary wireless Beacon technology with rolling security codes, which will be provided for free to subscribers. The technology, which requires consumer opt-in, allows stores to know precisely who is in their store at any time – a favorite merchant feature, says Bethge.

Among other things, stores could theoretically craft special promotions based on this knowledge. The service, which is Bluetooth enabled, also allows easy transactions when consumers hands are full (i.e. if they are carrying a baby or a cup of coffee).

Theoretically, using the Beacon, consumers can turn on the feature for the morning at some stores, and then turn it on for other stores in the evening. The Beacon technology also enables individual merchant apps, in addition to Web access. “It allows for very location oriented offers,” Bethge says.

Interestingly, Bethge says the Beacon service would not have had an impact when Perka was first introduced in 2011. At that time, “less than half of locations had WiFi. Now it is not even a question.”