Business: The Next Daily-Deal Frontier

June 3, 2011

With all the competing offers for hot-stone massages, dinner cruises and skydiving lessons flooding our inboxes today, it’s no wonder consumers have been complaining of a vague, anxiety-producing syndrome the media has dubbed “deal fatigue.”

But while the consumer space has become saturated with Groupon clones, the enterprise sector has barely been tapped.

This is changing. A handful of business-to-business deal sites have sprung up to offer big discounts on everything from search engine optimization packages to HR handbooks.

Within this group, Menlo Park, Calif.-based GroupPrice is aggressively trying to capture both the domestic and international B2B markets in order to cement its position as the “Groupon for businesses.” Launched domestically in January, GroupPrice recently went on a Canadian public-relations blitz to drum up business in the great white north. And on Tuesday, the startup will launch a new British deals site, GroupPrice UK.

Founded by Van Jepson, former CEO of Hot or Not and a veteran in the B2B advertising sector,  GroupPrice is trying to make a name for itself offering deals on software, internet marketing and PR services and discount cards for office supplies.

Here’s a sampling. On Friday, a small business owner could snag a custom-designed website with a free year of hosting for $375 (valued at $750), get 63 percent off a cost analysis report for $299, and or order a year of Experian credit reports for $49 (retail at $99).

Among the most popular offerings have been a $49 deal for internet public relations service guaranteeing 5,000 page views for the press release of your choice and $100 worth of office supplies from the wholesaler Dollar Days.

Jepson said the consumer daily deals segment was too saturated, too competitive and too labor intensive to get involved. And with years of small business experience, he also saw a that there was a big hole to fill in the enterprise sector.

GroupPrice is targeting businesses with an online presence, up to 25 employees and up to $10 million in annual revenue. That’s about five million businesses in the United States alone.

And there is definitely money to be made catering to this group, which spent an estimated $50 billion in 2009 on software and services from their vendors, according to figures from Jupiter Research. Meanwhile, there is every reason to think these businesses and merchants will drive their spending more heavily online in years to come.

But will this space ever produce the highly anticipated IPOs and possible $20 billion valuations like its consumer cousin? After all, the disparities in buying patterns between consumer and business clients are huge. While Groupon has conditioned a generation of coupon addicts hungry for their next fix of half-price gourmet nachos, there is only so many websites a company needs to have made or coaching sessions they have time for.

On the other hand, Jepson may have found a very sustainable business model. GroupPrice works with participating merchants to strike a deal much more favorable than on its consumer counterparts and the terms are less severe. And the company takes 20 percent of each deal, compared to Groupon’s 50 percent.

Jepson said he’s based his decisions on a realistic view of the B2B landscape. If his merchant’s aren’t making any money and disappear from the site or he bombards his customers with too many deals they don’t care about, he won’t be around for long. “Basically, I am aiming for zero deal fatigue,” Jepson said.

Image courtesy of GroupPrice

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