LivingSocial, the Amazon-backed #2 group-buy site that takes 35% commission (as opposed to Groupon’s 50%), sold only 115 group discount coupons for it’s latest deal – not surprising considering it was for one night stay at a hotel for $10,000 (for four people) or $2,000 (for two).
What will be surprising to some is that group-buy is moving upscale, selling big ticket items very different to the low-cost impulse purchases of 1/2 pice local restaurants deals.
Designed no doubt to garner PR headlines, the advertiser, Fairmont Hotels (SF), has offered a $20k package for four at half price $10K or $2K for two people on the ‘Escapes’ travel section of LivingSocial. The package for four included a one night stay in the Penthouse Suite, a Four-Course En Suite Dinner for Four, Exclusive Tiffany’s China Set for Four, Monogrammed Robes to Keep, Bvlgari Amenities, Red-Carpet Welcome Package Valued at $500, and a Full Day’s Access to the Penthouse Maserati Quattroporte. Oh, excercise classes and a Fairmont Platinum Loyalty Card were included too – but not taxes and gratuity.
Big ticket items are not new to group-buy platforms, Mercedes sells cars on them, opticians (Foulkes) offering $4000 eye surgery on them (for $2000 – 237 purchases), and bike retailers offering $900 Dutch Oma Fiets bikes (for $499 – 40 purchased), but it’s a trend we think we’ll see more of as deal platforms (flash sales vs. group-buy) fight it out and consolidate.
But the deals will have to be compelling – several recent big ticket group-buy deals have fallen flat – a B2B group-buy offer for $25,000 consulting services for Ajilitee (for $12,500 – minimum not reached), and a travel agent (Ludos Tours) selling a $4950 PGA Masters Tour Package (for $2,475 – minimum not reached).
We’ll have to see whether the $15K off a $100K spaceflight from newly launched TripAlertz if 10+ people sign up, works and is anything more than a PR stunt.
As currently set up, group-buy platforms appear best adapted to sub $100 deals – but that means there could be an opportunity for new players to launch specialist group-buy platforms for high ticket items with a personalised service and information – offering personalised service (from pre-purchase customer service to bespoke negotiated based on subscriber demand (e.g. 20 people wanting to buy (say) a Mercedes find each other on the site and a deal negotiator acts on their behalf to negotiate a deal). In other words – a demand-led group-buy service.
Such a a demand-led premium group-buy service would be on our short list of big opportunities in the social commerce space.