While Groupon started out as a way for consumers to find neighborhood deals on manicures and pilates classes, it fast attracted interest from blue-chip marketers looking to goose sales using flash coupons. September marked Groupon's first national promotion, a partnership with Gap that sold 445,000 coupons for a total of $11 million. There are more national partnerships with retailers, restaurants and travel companies to come, and it's not stopping there. "At some point, much like we did the national blitz, I think you'll see some global blitzes over the coming year with major multinational brands," said Rob Solomon, Groupon's president-chief operating officer.
Mr. Solomon credits Groupon's rapid success in part to merely being the first to devise the idea of collective buying online to negotiate discounts on products, services and entertainment. "There's a first-mover advantage that really helps you," he said. "Until Groupon came along, there wasn't this phenomenon to [create something online that] moves hundreds of thousands of units in the physical world. We definitely struck a chord with a brand that resonates with small business and consumers, and we're solving problems for both of them."
Also spurring popularity is the social nature of each offer; subscribers are encouraged to share promotions with family and friends, and many of the deals are not only for products but experiences.
The success of Groupon is inspiring a crop of imitators, including Walmart, which recently launched a Facebook-based app called Crowdsaver that unlocks discounts once products get enough "likes."
Groupon has built its brand organically, via advocates endorsing the service by word-of-mouth and online, but sometime in the near future there may be traditional advertising techniques. "The next level of extending the brand is traditional offline media and techniques to build the brand," said Mr. Solomon. "If you look at the great iconic brands that have been built on the internet, they all go through that transition and I think we'll go through a similar progression."
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