Deal-a-day sites catch on in b-to-b

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Alex Miranda was an entrepreneur looking for a new way to promote his Web design firm, MyProSuite. Late last year, he approached Groupon to see if the booming social commerce site would run an offer from his company.

The way Miranda tells the story, Groupon declined to run the offer because MyProSuite didn't fit its vendor profile. The experience, however, gave Miranda an idea: He would start a deal-a-day site with a b-to-b bent, mainly focusing on small and midsize businesses.

Miranda launched BizGrouper, which has a South Florida focus, in February. He's not alone in trying to bring a b-to-b flavor to the social commerce market that has been dominated by Groupon and LivingSocial. Recent rollouts of b-to-b deal-a-day sites include B2Bucks, BizyDeal, BossRocket, GroupPrice, OfficeArrow and RapidBuyr.

BIA/Kelsey, an advisory firm for local media, estimates there are more than 200 companies currently in the social commerce market. The firm projected that U.S. consumer spending on deal-a-day offers will increase from $873 million last year to $3.9 billion in 2015, a compound annual growth rate of 35.1%.

“We're just at the tip of what it means on a large scale,” said Steve Ennen, president-chief intelligence officer of Social Strategy1. “I don't think there's any doubt [that] it will change the way we buy and sell in the near future.”

Utpal Dholakia, an associate professor of marketing at Rice University, is skeptical, however.

He likened the frenzy surrounding social commerce to the time a decade ago when entrepreneurs were introducing online b-to-b marketplaces to facilitate supply chain transactions in vertical markets. “We all know what happened with the dot-coms,” he said.

Dholakia and other observers believe deal-a-day sites ultimately are not compatible with the b-to-b sector for several reasons. First, many b-to-b deals require a longer and more complex buying process than simply deciding to pay for a car wash, an example of a recent Groupon offer. “I do think that in b-to-b this plays best with SMBs, not big brands,” said Chuck Richard, VP-lead analyst at Outsell Inc.

And because b-to-b by its nature focuses on small, vertical audiences, social commerce in this space may not be shared in the way that consumer audiences, by their sheer size, have the ability to do.

Finally, Dholakia questions the basic wisdom of couponing for b-to-b marketers. “You really don't want to pin your strategy on giving very steep promotional discounts,” he said.

Despite these challenges, many b-to-b marketers and entrepre- neurs are exploring the market's potential. In March, Ajilitee, an IT consultancy, became the first b-to-b marketer to have an offer on Groupon. The company offered $25,000 worth of business intelligence or cloud computing services at 50% off.

Even though in the end no one purchased the services via Groupon, Ajilitee considers the experiment a success and a confirmation that b-to-b social commerce has potential.

“I think we were just a little bit early in testing the waters,” said Diann Bilderback, Ajilitee's CMO. “But we definitely struck a chord in the market. There was tremendous response in terms of the market coming in to see what we were doing.”

Bilderback, who called Ajilitee's offer a “loss leader,” said one downside was that Groupon's posting of the deal appeared to be too short for b-to-b buying cycles. Ajilitee posted its deal on its own site when the deal's official run on Groupon ended.

Ultimately, however, the publicity generated by the experiment was invaluable for Ajilitee. “Our website traffic grew 300%,” said Michelle Smyth, director-marketing at LaunchPoint Corp., Ajilitee's parent. “It was a hockey stick.”

BizyDeal, which opened for business last Monday in Groupon's hometown of Chicago, is another company putting a b-to-b spin on social commerce. The startup was co-founded by Gary Slack, CEO of b-to-b marketing agency Slack & Co.

BizyDeal's first deal—two 2011 Ford XLT Transit Connect cargo vans, limit one per customer—had no shortage of interested parties. “They sold before our first inaugural Bizy email was sent to our subscribers about the deal,” Slack said.

The vans sold at $11,700, 50% off the sticker price.

Slack has heard the potential objections to deal-a-day sites aimed at businesses, but he's not buying them. His goal with BizyDeal is to amass a large audience of small-business owners, an audience that is often hard to find elsewhere. He believes this audience will be attractive to large marketers. “Some of the most welcoming, most interested potential seller partners we're speaking with are large enterprise companies,” he said.

Slack doesn't foresee BizyDeal selling commodities but offering deals on goods and services business owners—not office managers—will be buying. He envisions health screenings, online payroll services and high-end corporate entertainment options being available at discounted rates via the site.

Another b-to-b-oriented social commerce site, RapidBuyr, is getting ready to debut. This startup plans to align its daily deals with American City Business Journals' 40 local business websites.

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