BUENOS AIRES (AdAge.com) -- Young Latin American entrepreneurs, often using experience gained from living in the U.S., are running some of the first group buying sites back in their home countries, sometimes beating Groupon into the market. They are tweaking the discount-coupon business model to indulge Latin tastes for spontaneity and, in Argentina, even let buyers pay with cash rather than a credit card.
Julio Vasconcellos, 29, returned to Rio de Janeiro in March 2010 from a Silicon Valley internet startup and with two partners started Brazil's first daily deal site, Peixe Urbano (Portuguese for Urban Fish). Nine months later, Peixe Urbano has almost 5 million registered users and 300 employees and has sold 2 million coupons. Last week, the site opened in its 30th city, Manaus, in the heart of the Amazon.
"Brazilians love discounts and promotions and are super social in their use of the web," Mr. Vasconcellos said.
They're not exactly like Americans, though, who often purchase coupons valid for up to six months, an eternity to a Latin American consumer.
"People like entertainment deals a lot more," he said. "And they're more spontaneous. Brazilians tend to plan less. Buying a coupon for a restaurant to use in two months seems so far ahead. Specific things in the near future tend to do really well, like happy hour at a bar."
Brazil's sprawling urban areas are much bigger than U.S. cities. Sao Paulo has about 20 million people, and can take two hours to cross, so offers have to target neighborhoods throughout the city. That's also true of Mexico City, the largest city in North America, where Groupon clones tend to divide the metropolis into three or four separate sites covering different districts.
Peixe Urbano wasn't alone in Brazil for long. "About 250 sites came in after us," Mr. Vasconcellos said. "About 20 other sites have 'Urbano' in their name -- even Groupon used the name ClubeUrbano [at first]. And because we're called 'fish,' dozens of sites have every possible animal name."Working with marketers, Peixe Urbano did a product launch for Coca-Cola Co., offering a discounted 12-pack of Coke Light Plus in Rio. And a promotion with Curves in five cities sold 20,000 gym memberships in 24 hours for about $35 each, or 75% off, he said.
"Our average deal in Rio or Sao Paulo sells about 2,000 a day," he said. The biggest local deal so far: 30,512 coupons for a sandwich and dessert combo, discounted to $4.65 from $15, at a Sao Paulo fast-food restaurant.
To pick new cities, Mr. Vasconcellos looks at the local online population and factors like income per capita. The site posts a list of future cities and invites people to sign up, letting him judge demand. The hardest part, he said, is simply getting time with busy small business owners to explain the concept.
To convey Peixe Urbano's "fun, playful nature," Mr. Vasconellos hires writers from Brazil's top publications, including Veja magazine, and newspapers Folha de Sao Paulo and Globo. Playing up the fish theme, lively copy urges the cardume (Portuguese for a school of fish) to dive into various offers.
|Peixe Urbano animated ads|
In animated banner ads, done in-house, fish swim through an underwater city carrying signs reading "Peixe Urbano. Exploring the City." Rival Groupon broke its first ad campaign in Brazil last week with TV, web and radio spots by Energy, part of WPP's Grupo Newcomm. Groupon, in Brazil since June, claims 3.5 million subscribers in Brazil. Judged by Facebook popularity, Peixe Urbano has 242,043 fans to 34,170 for Groupon.
"They're doing a pretty good job," Mr. Vasconcellos said. "Groupon knows the space well and is investing heavily in advertising. They're probably our most serious competitor."
Peixe Urbano doesn't have international backing, but Mr. Vaconcellos says "it already generates cash from the first day, so we can self-finance pretty quickly. It's still super early. There's lots of space to grow. "
Traffic to Brazil's group buying sites hit 5.6 million unique visitors in September. Sales will total about $50 million this year and $300 million is forecast in 2011, said Rino Ferrari, president of RinoCom/ICOM, Sao Paulo.
Elsewhere in Latin America, Mexico's Arturo Nanes, a former McKinsey & Co. consultant who got his MBA in the U.S. from Stanford University in 2007, started BuzzUrbano in June. BuzzUrbano offers "Buzz of the Day" deals in Mexico City and five other cities. Groupon has a small presence in Mexico, along with clones like Cuponzote.com and OferCity.com.
For daily deal sites in Mexico, the Spanish-speaking U.S. Hispanic market beckons for growth. BuzzUrbano has its eye on San Diego. The company started a Facebook page in July for BuzzUrbano San Diego with a post saying it will open in that city soon and has collected 46 Facebook fans.
In Argentina, Groupon launched first and is the leader, followed by Clickonero.com, Notelapierdas.com.ar and Cuponica.com. Leading publishers have their own daily deal sites, including La Nacion's Agrupate.com and Clarin's Clubcupon.com.ar.
"There are between 10 and 12, but all the signs are that next year only four will survive," said Cuponica's CEO Max Guerra, 39, who lived in the U.S. for 10 years and plans to expand to Mexico, Lima, Santiago and Bogota next year after securing financing. "One of the main differences with the U.S. is that Latins want instant gratification. In other countries, people buy in advance. Here, the buy is usually to use instantly. Another big difference is that our sites give people the chance to pay in cash."
Groupon doesn't accept cash in Argentina, but the other sites work with Pago Facil or Rapipago, storefront operations where people often pay their bills.
Groupon operates in Argentina, Brazil, Mexico and Chile in Latin America, but most of its Latin American traffic is from Argentina. The company has drawn some mixed reviews from bloggers. In Chile, local bloggers referred to Clandescuento, the local daily deal site Groupon took over in June, as Spamdescuento. And Techcrunch cited reports that Groupon entered Brazil with a site full of fake deals; Groupon told the blog that it shows examples of deals in new markets, but should have made it more clear they weren't real.
In Argentina, a prominent blogger complained at length about buying a Groupon sushi offer, then trying to order dinner that night from the overwhelmed restaurant only to find home delivery would take at least a week. His "Buying on Groupon Was a Disaster" post drew over 50 comments recounting similar experiences (plus a few people who said he was way too demanding).
Daily deal sites are learning -- and savvy players like Peixe Urbano and Cuponica already know -- that Latin Americans don't always behave like U.S. shoppers. (Check back tomorrow for the final story in Ad Age's three-part series on group media-buying trends around the world).
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Contributing: Valentina Vescovi