Grooster Blog: August 2010

Flash buying can be a great way to bring exposure to your business. It's important to be prepared before your flash or group buying promotion runs. Flash buying has no upfront cost, but there are definitely cost in terms of the discount and commission so its important to make sure you get the most out of the promotion. Here's a few pointers for merchants to prepare and to maximize success.

Make sure your website is ready: Lots of people will go to your website during the promotion and most merchants see a significant bump in traffic. Even with promotions from smaller flash buying sites, you'll likely have thousands of people going to your site. Make sure your links work, your product/service information is updated,
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Sunday afternoon.  Husband drinking chardonnay, watching the boats go by.  18 month old wants to play trucks.  4 year old is dressed as a fairy, building lego and asking me to play too.  My homemade paneer (indian cottage cheese) is nearly ready to go - just need to cut, slice and mix with the spinach and spices.  Chicken is marinating - LOVE tandoori chicken.  Sadly, I didn't have time to make the naan from scratch today (store bought is a sorry substitute).  I'm making dinner for my in-laws and family today, as we do most Sundays, and they'll forgive me for the store bought naan, I'm sure.  In the middle of all that, here I sit. Writing a blog post.  Given all this, I thought you all might want to know a bit more about me.  Maybe I take on too much, maybe it's just right.  Fact is, Grooster is a lean start up. 

My background is in engineering (electrical), but I've spent most of my career as a Construction Project manager.  I grew up in Edmonton, lived in Vancouver, San
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Local advertising is about local businesses getting people in their stores. To put the size of the local ad industry in context, it is about 25% of all advertising and is well over $100 billion. Millions of local businesses spend their $2k to $10k annual ad budget on Yellow Pages and classifieds. A few of their dollars go into local TV, radio, etc too. The pain of traditional local advertising is that it’s really difficult to measure the return on invested ad dollars with accuracy. You can't count how many people phone the business or walk in the door based on the ad. Businesses owners just guess how much more their phone rings. If the business owner thinks they got more calls, they'll subscribe for the advertising again. This is an subjective way to measure success.

The key metrics that local businesses should use to measure the effectiveness of advertising are:
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The flash (or group) buying business model is simple and therefore appealing. There is a plethora of new and existing businesses entering the field, like Yelp, Open Table and 200 other startups. And yes, the number of entrants scares me.

To explain the business model, I'll briefly describe the revenue stream, cost of sales, and typical expenses of group buying businesses. Keep in mind that this is a simplification and there are many variants in this dynamic market.

Revenue: Group buying sites typically collect all the transaction revenue.  That means the group buying sites have a payment gateway and if a $20 deal is sold to 500 buyers, the group buying site will have gross revenue
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