LONDON (AdAge.com) -- Many European group buying sites have already fallen by the wayside in the rush to beat Groupon into the market, but the survivors -- and a plethora of new entries -- are finding new ways to win over consumers and merchants, like charging less than Groupon and offering customers loyalty cards.
In the U.K. alone, Scrumbuy, Dealmob, Groupola, Likebees and Snipper have come and gone this year. Groupon, which entered Europe in May with the purchase of German company City Deals, is adding 40,000 subscribers a day in the U.K. and about 1 million a month in France, said Rajen Ruparell, director of Groupon U.K. Each country has about 4 million subscribers.
U.K. collective-buying sites say they're trying to build better relationships with merchants than Groupon. At KGB Deals, operating in the U.S., France, Italy and the U.K., Communications Director William Ostrom said KGB doesn't insist on a two-year exclusive deal with merchants the way Groupon does. "We are more of a hub, part of a social community, and we tend to be more generous to the merchants."
Nick Brummitt, founder and owner of Wowcher, said smaller players are better at customer service and working with merchants, from whom they take 15% commission instead of the 50% demanded by Groupon. Plus, he said, "Lots of businesses don't want 2,000 new customers. Groupon is killing the beauty business in London."
Since Groupon-like sites are often criticized for supplying one-time customers who never return after using their deeply discounted coupon, Wowcher is introducing loyalty cards offering smaller, long-term discounts to encourage people to return regularly to places where they spent their Wowcher vouchers.
The site also tries to be entertaining, introducing a deal on a visit to the dentist by saying "The Tooth Fairy is a burglarizing fetishist specializing in black-market ivory trade, and she must be stopped."
Mr. Brummitt said he was invited to Groupon's Chicago headquarters in February, but his startup was not big enough for Groupon's ambitions. He said Wowcher is already making a "small profit" and plans to open up right on Groupon's doorstep in Chicago next year. "Just 1% of their business would be very nice," he said.
Even Groupon itself -- branded GrouponMyCityDeal -- is less about numbers in Europe, and has been gradually abandoning thresholds for deals. A spokesman said, "We found that traders still wanted the 48 customers who had signed up, even if the threshold had been set at 50. So the model has evolved slightly and minimum tipping points are phasing out."
The group-buying model is developing somewhat differently in other ways in Europe, including paying more attention to the premium end of the market.
Discount vouchers for local restaurants and services have been available for years in Europe, distributed via e-mail groups, specialist websites and location-based apps, so the arrival of daily deal sites hasn't had quite the same impact in Europe as in the U.S. That ready availability of vouchers, combined with the youthful, upmarket profile of the early adopters of group buying, means that an element of discovery and "cool" is needed to attract people to Groupon alternatives.
London-based Keynoir, for example, offers Michelin-starred restaurants. CEO Glen Drury said, "The idea is to 'curate' the member offers, keeping the feeling of serendipity every day."
At the extreme end of this market is Nuji.com, a new high-end shopping social network based on sharing stylish fashion, books, gadgets and design with like-minded hipsters. As the site grows, Nuji intends to start negotiating deals with retailers to create group buys on items that have been tagged and recommended by multiple Nuji members.
In France, Groupon's arrival is spurring interest. A Groupon France spokeswoman said, "We did not have a big coupon culture here, but leisure, restaurants and beauty are such a big part of people's lives in France that they embraced Groupon -- not so much for the coupons as for the adventure."
Groupon's Mr. Ruparell said popular deals vary by country. Germans love car racing and spending days in high-performance cars, while the French go for skiing deals and their favorite restaurants and spas. Brits aren't afraid to splurge on big-ticket items like $1,500 laser hair-removal treatments, and $3,000 wedding packages (26 were sold), reduced from $7,500.
Today Groupon offered an American Apparel deal in 10 countries in Europe. In 2011, Mr. Ruparell said Groupon plans to focus on more cross-border deals and "international synergy," like wine-tasting and foreign holiday packages.
Elsewhere in Europe, Estonia's Cherry.ee started small with just one deal a day for the entire country, but has expanded to different cities and boasts one of Estonia's biggest Facebook groups. Turkey has a Groupon clone called Grupanya, and the Czech Republic has so many group-buying sites that a code of ethics is being developed.
German-based DailyDeal, which also has a presence in Austria and Switzerland, claims to be the biggest owner-run couponing portal in Europe, carrying exclusive deals with iTunes and Hilton hotels among others. A survey in July showed that 54% of DailyDeal members are college graduates and 74% earn more than $55,000 a year, underlining the more upmarket profile of group buyers in Europe.
Germany is the hub of group buying in Europe, and was also the home of CityDeal, sold to Groupon in May. That company was started in December 2009 by the three Samwer brothers, Oliver, Alexander and Marc, serial internet entrepreneurs who made their first fortune selling their own eBay clone to eBay in 1999 for $50 million. They subsequently became known as the "ringtone Mafiosi" for making millions out of their company, Jamba!, creator of the catchy Crazy Frog ringtone that drove Europe mad in 2005. They sold Jamba! to NewsCorp soon afterward.
The Samwer brothers' latest success and the speed at which group buying is taking off in Europe suggests further mergers and acquisitions are still to come. Keynote's Mr. Drury, who is looking at expanding from London into other European cities, said, "We've seen the money that's around for Groupon and Living Social. It's set the standard for what the market will pay. There is consolidation left to do, and we have set out our stall as different, which is a reason for the big guys to invest in us."
At Crowdity, founder Rob Berrisford summed up the pace: "Sign-ups are doubling every week. Everyone at a high level in marketing has now heard of Groupon and wants to get involved in group buying."
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This is the last in a series of three stories about group-buying trends around the world.