Let's Deal, Swedish Daily Deals Kickstarts By Beating Groupon's First Three-Month Sales
E-commerce business is on fire, yet still only catching on. Gilt Groupe, members only daily deals on luxury items, just raised $35 Million in funding, at the same time tripling its revenue to $450 Million. Woot, another daily deal service, was acquired by Amazon for $110 Million, and Groupon, everybody's favourite daily deal service to clone, has already started shopping its clones with its new $135 Million funding in the bank. Little unexpected, where there's a market opportunity with a low barrier to entry to grow from zero to $1 Billion in 18 months, clones become inevitable.
Europe is up next to become a battlefield over online shoppers. German CityDeal was acquired just a month ago by Groupon, LivingSocial, another US daily deal service, announced to expand to United Kingdom, and even the Japanese want their piece of the cake. Rakuten, the largest e-commerce site in Japan, acquired the French e-commerce site PriceMinister for admirable €200 Million. Rakuten is to give a tough run to Finnish high burn rate e-commerce startup Fruugo, who keeps cutting down its losses, aiming to stay in the game to create the all in one European online marketplace.
Groupon Update 14th July: Groupon (previously CityDeal) is as of today closing down with immediate effect four of its five Sweden offices. The staff was informed on short notice, and are now being let go with only a small remaining operational team left in Stockholm. The decision comes only two weeks after it's competitor LivingSocial announced its expansion into UK market, as opening in 25 new cities in the US. It's apparent that Groupon is restructuring in order to slim down the high level of fixed costs it's been know to run its European operations. Groupon hasn't made any official announcement yet, but other Swedish group buying sites are already being contacted by its now former employees. The future of both Stockholm and Denmark office remains uncertain. If I were you, I'd check back in two weeks.
Let's Deal, The Brightest Shining Swedish Groupon Clone
And so has also the gold rush of group buying, social shopping and daily deals finally arrived to Sweden. The brightest shining star of the Swedish Groupon clones is Let's Deal, a three month old Gothenburg startup, who just celebrated having saved the first SEK 1 Million ($133 000) to its customers. That is slightly more than Groupon reported ($100 000) to have sold during its first three months in Chicago.
Let's Deal works exactly like Groupon, offering 40-70% discounts on restaurants, cafés, spas, beauty salons and events. It's currently operating in two major cities Gothenburg and Stockholm, targeting few cities at the time, while building up a strong sales team to help retailers offer appealing deals. (Tip: If you're thinking of firing up your own Groupon clone, you should first watch this interview of Andrew Mason, founder and CEO of Groupon, on This Week In Startups. Just saying...)
Buy Together and Gruppi are two other Swedish newcomer clones of Groupon, but for the moment, Let's Deal holds the lead by executing better on both engaging its Facebook audience, as rewarding new customer recruiting. It also does best explaining the payment process to make the customer feel secure how the credit card information is being handled.
I recently met with co-founders Lars Karlsson and Alexander Hars at TechCrunch Nordic Copenhagen / Nordic Meetup. Lars and Alexander have their core competence in building and making an exit on B2B software product, which also comes in handy when targeting the consumer web. (Now, those who know me, also know that having been deputy CTO myself, I love to take the pulse on a startup team by chatting with the CTO, since having techies in the core founding team is crucial. Thankfully, I had a long and good talk with Lars, CTO of Let's Deal.)
Swedish B2C E-Commerce
The Swedish B2C E-Commerce is showing steady growth. In 2009, 63% of the Swedes purchased goods or services online, a 20% growth from the previous year. 82% of the Swedes in ages 25-34 purchased online in 2009. The annual Swedish B2C e-commerce was estimated up to SEK 53,9 Billion (approx. $717 M) in 2009, with travel, event tickets, and clothes or sporting goods as the top three categories. (Source: E-handelstrender)
The road is long for Let's Deal, though, and the one who offers the most attractive deals wins in this game. While Groupon has a waiting list of hundreds of businesses while banking money, Swedish retailers and small business owners are only being introduced to the phenomena and power of group buying as a marketing channel, and a new form of local advertising.
When it comes to social buying and daily deals in general, I can't wait to see how Twitter's new @earlybird is to stir up the overall competition.
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