After Failing To Buy Groupon, Google To Launch A Competing Service

As the time-honored adage goes, if at first you don’t succeed at buying a company in a multi-billion dollar deal, try to out perform it with a competing service of your own. Such is the tack Google is apparently taking against Groupon.

After Google failed to acquire Groupon with a $6-billion offer, the Internet giants have now turned to creating their own brand of online coupons for local deals with Google Offers, says Mashable, citing sources who they say provided fact sheets about the new launch.

Google Offers would work a lot like Groupon, sending subscribers a daily email with deals in their neighborhood, with a limited amount of time to buy into that deal. And then, much like Groupon, after enough people sign up, the deal is “tipped” and the discount goes into effect.

Mashable received the below comment from Google on their story:

Google is communicating with small businesses to enlist their support and participation in a test of a pre-paid offers/vouchers program. This initiative is part of an ongoing effort at Google to make new products, such as the recent Offer Ads beta, that connect businesses with customers in new ways. We do not have more details to share at this time, but will keep you posted.

Imitation might be the sincerest form of flattery, but something tells us Groupon won’t see it that way.

Google to Launch Groupon Competitor [Mashable]

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  1. GMurnane says:

    Hopefully Google’s creative juices will be able to produce a more successful service than Groupon. I like the idea of Groupon a lot; but in my area (a major US city) they have very few deals and never much variety in the businesses offering discounts. I don’t mind trying something new or different (esp. if there is a discount) but when I see the same deal over and over again, I lose interest (and faith) in Groupon.

    • fredbiscotti says:

      Dude, the suburbs of Huntington do not count as a “major US city.” Just because local business suck sin your area doesn’t mean Groupon is a failure. It means either you or your city is lame.

      And clearly the billions of dollars Groupon is raking in says you’re wrong.

      • coren says:

        Is it wrong that I’m alittle disturbed that you know where that poster lives?

        Anyway, how is their personal experience wrong? They didn’t call Groupon a failure, they didn’t say it wasn’t succesful. They did say they wanted Google to be more succesful and that Groupon doesn’t provide much they would take advantage of.

      • GMurnane says:

        I don’t know what would make you (fredbiscotti) think I live in some suburb named “Huntington,” but when I say I live in a major US city, I mean it. I live *in* (not near) a city which is one of the top 5 largest cities in America. Also, please read my comment throughly before declaring “you’re wrong.” Your comment clearly show a strong command of the English language, so there is no excuse for thinking my comment in anyway implied Groupon was unprofitable. I’m sure they make money; but that doesn’t mean Groupon is a “good” company or offering anything I would want.

      • RevancheRM says:

        Reading comprehension fail.

    • Etoiles says:

      I find that between them, Groupon and Living Social have a pretty broad array of good deals for my area (Metro DC — work and home are on opposite sides of the city so we benefit from the Montgomery County and NoVA deals as well as the DC-proper ones). We always seem to have a few restaurant deals lying around on a weekend when we’re trying to decide where to go.

      It does really seem to vary area-to-area, though, which is of course the issue with local stuff. I know a lot of people who really like both services in DC and in Boston, but I don’t know many in NYC or on the west coast who take advantage of either.

      • Southern says:

        And don’t forget restaurants.com.. I really like them for a variety of different restaurants, and sometimes they’ll have a $25 coupon for $3, like they are doing RIGHT NOW.. :)

        • NickRayko says:

          Got a link for that deal? I don’t see anything about coupons or deals at all on restaurant.com

          • caradrake says:

            Sign up for their emails and you’ll get one every day/every other day. They cycle between 60%, 70%, and 80% off… and will rarely even do 90% off promotions. The latest coupon is for 70% off and for a free $10 restaurant.com gift cert, using the code “ENJOY.”

            This coupon code ends tomorrow, so they’ll likely send a new code out tomorrow or Tuesday.

            The codes are usually also posted to deal-finding websites, so do a google for “restaurant.com coupon codes” and you’ll be good to go, without the constant email spam. ;)

          • Kibit says:

            Use promo code ENJOY and get $25 restaurant gift certificates for $3 and you wil also receive a $10 Restaurant.com eGift card with every order. Offer good until Monday Jan 24th

          • Rena says:

            Add an ‘s’.

            • Southern says:

              Actually you want the one WITHOUT the extra “s”. That’s my fault.. I do that all the time, and wind up going “THIS isn’t the right site!” — then have to remove the extra S. :)

              The one with the “s” is just a site that takes advantage of the original sites name; they don’t actually sell any of the certificates, although they do show you a map of restaurants in the area.. More than likely they just make money on the advertising banners that pop up.

              But the one you want is http://www.restaurant.com/ — just use offer code ENJOY when you check out (although that coupon expires tonight.. They’ll probably have a new one out tomorrow. :)

      • GMurnane says:

        Cool,thanks for the tip.

    • Loias supports harsher punishments against corporations says:

      The daily deal company that has coupons for the places I want to go gets my business. Groupon doesn’t have much for my area (I’m too far from the major metro area that cater to) so if Google can spearhead local that it gets my business. Doubt it though.

  2. humphrmi says:

    Google is good at what they invent themselves, but they have a poor track record at imitating other good ideas on their own. I’m thinking mostly of their feeble social networking attempts.

    And their email service, I consider “inventing themselves” because they totally ignored what everyone else was doing with web based mail up to that point and came out with something really innovative. But I don’t see this being that case.

    Good luck to them.

    • wrjohnston91283 says:

      Hopefully Google will let users choose which categories they want to see offers from. As balthisar pointed out, too many of them are for various spa services. I understand that there is a very low marginal cost for those services, so they can offer a very large % off, but I’d rather see more deals for restaurants or products.

      • wrjohnston91283 says:

        Hey, what do you know, they do ask. Must be something I either skipped when I signed up for a deal a friend forwarded or new.

    • ParingKnife ("That's a kniwfe.") says:

      Google’s poor track record at social networking is due in large part to the fiasco immediately following the Buzz launch. I don’t think they lack the ability to create or improve existing services (look at Blogger and YouTube, both acquired by Google) I think they just failed miserably on the day one launch of a product and now have to create a whole new product if they want to overcome the bad reputation caused by that gaff.

      • psm321 says:

        Don’t forget Orkut

        • RevancheRM says:

          Which is very popular with some. Not in the US, but in Brazil & India, it competes with that other social network.

      • humphrmi says:

        I’m also thinking of Wave. which was supposed to be a framework to “rule them all” (collaboration, networking, social, chat, and email apps). Trouble was, even just to *use* it, there were like 30 different videos you had to watch (and what the hell is wrong with just making a manual, anyway?) to say nothing of actually developing on the platform. Way too complicated. Google email took existing web-based mail and said “let’s make this simple”. Wave took social networking and said “let’s make this 10x harder.”

        • ParingKnife ("That's a kniwfe.") says:

          Wave was great in my opinion. Unfortunately Wave never really took off in large part because of the hours of video they made to describe how it worked and because of the idiotic beta system Google has.

          An open beta just doesn’t work for social networking. It keeps them from attaining the critical mass necessary to take off- if your friends aren’t on it, you’re not on it. They needed to iron out kinks in a closed community and then do a full scale launch. When Zuckerberg started Facebook, it was at first limited to a small community, but that community was in and of itself somewhat closeknit- people you went to school with. Whereas a new social network splashed across the Internet that you can only invite six friends to? Destined for failure.

          • MrEvil says:

            Wave also didn’t take off due to the utter shit performance of the product. I DON’T WANT REAL-TIME updates as I type and they never allowed you to turn that nonsense off. Even on Google’s own Browser Wave ate a TON of CPU cycles and induced horrendous lag when just typing.

            • ParingKnife ("That's a kniwfe.") says:

              I dunno, I ran it on a dual core Linux machine so my mileage may have varied because of that or something else. But I recall being able to turn off the visible typing feature. This was demonstrated in the very first video.

        • Chaosium says:

          “I’m also thinking of Wave. which was supposed to be a framework to “rule them all” “

          Wave was a demo for their enterprise technology, bits have been incorporated back into gmail, and they’re fully developed for eventual adoption for companies. It wasn’t a “failure”.

      • Cosmo_Kramer says:

        I vaguely recall that Google screwed something up shortly after launch, but I don’t recall what it was and I know it had nothing to do with my lack of desire to use their service. I think it had something to do with privacy? I usually don’t get uptight about that stuff. I just never used it because no one else was using it.

        • ParingKnife ("That's a kniwfe.") says:

          Well then the privacy fiasco affected you.

          You don’t use it because no one else wanted to use it. Why didn’t anyone else want to use it?

          ;-)

    • tbax929 says:

      It’s funny you mention their e-mail service, because it’s the least favorite thing they do that I use. I only have gmail because I have an Android phone, and everyone was touting how great gmail is. I can’t stand it. It constantly duplicates my contacts, sometimes deletes them altogether, and I don’t find it user-friendly at all.

      Despite the ribbing I get from friends, I still predominantly use my msn account.

    • Chaosium says:

      “Google is good at what they invent themselves, but they have a poor track record at imitating other good ideas on their own. I’m thinking mostly of their feeble social networking attempts. “

      So in other words, they succeed at everything they imitate (which is a TON) BUT buzz and that other social networking site. You’re not really selling us on their failures here, considering that there were only two. They weren’t the first for search and portal either.

  3. balthisar says:

    Wow, if Google can provide offers for something besides salons, spas, massage parlours, and hair dressers, maybe I can eventually try one of these things!

    • INsano says:

      Yeah, and the massage parlors aren’t even the *good* ones.

    • DrRamblings says:

      I’m not gonna lie….I buy most of the massage & spa offers, it’s a sickness.

    • check this out says:

      Agree, that’s why I left Groupon after only few day. Does not take too long to recognize repetition and quality of their offers.

    • Etoiles says:

      Wow… like 2/3 of our offers are restaurants and food. I could use more spa offers!

    • barty says:

      That seems to be about 80% of the Groupon offers I get in my area. Maybe once a week there will be a restaurant or some other service I use thrown in there, but usually it will be for a single location that is in an inconvenient location on the other side of town.

  4. TitusThorngate says:

    I hope the idea isn’t the daily email spam, but instead to tie this really heavily to local search – so that when I search for, say, “pizza” I not only get a list of local pizza places, but I can see my friends’ recommendations (through the new Hotpot) as well as which ones are offering special deals. How incredibly useful would that be??

  5. Amnesiac85 says:

    One part of me wonders if it was a mistake for Groupon to turn down Google. I feel that Google has enough sway to at least get better places than Groupon. Groupon is often hit or miss here in Atlanta. They sometimes have really good deals, but more often than not I’ll pass

    On the other hand, the more people offering me coupons and deals, the better.

    • Rena says:

      Somehow I can imagine Google going “You won’t sell out? Fine, we’ll crush you instead.”

    • theothered says:

      I thought that at the time. Since nothing Groupon offers is unique and protectable, there is nothing preventing others from getting into the business. Turning down the Google offer will turn out to have been an absolutely idiotic decision. Especially since it was more than generous given Groupon’s revenues, Bet you 3 years from now they’ll be lucky to get a buyer for 10% of the $6 Billion offer.

  6. FrugalFreak says:

    and we win! would love for them to bundle with google checkout offers

  7. Lucky225 says:

    They could call it goopon, roflz.

  8. Southern says:

    Sorry Groupon, you had your chance.. Shoulda took it. :)

    On the bright side, Google just saved 6 billion bucks and will have a better product in the end. :)

  9. Okkasan says:

    Groupon just made a headline in Japan for a fraudulent offer that left hundreds of people fuming on New Year’s Day (it was like a 50% off offer for a special NYD food from a famous restaurant, but some were delivered rotten and some were never delivered) . I guess the problem over there is that Groupon didn’t do much of screenings on its participating merchants, while sales dept. was pushed to get more saucy offer to attract people. The concept of Groupon may not be that bad; it really needs to be carried right. I hope Google learns some lesson from that and comes up with something better.

  10. shadowboxer524 says:

    Can someone explain to me how a service like Groupon makes money? I can’t fathom how it is worth $6 billion.

    • missdona says:

      They get a cut of everything they sell. They’re totally profitable, but not $6B worth, more like $500M worth.

    • fantomesq says:

      They get something like a 50% cut on what they sell… with very little overhead, that’s nearly all profit. That’s right, since the deal is already 50% off, the seller gets 25 cents on the dollar for their goods/services…

      • coren says:

        So the real question is not how they profit but how they lure businesses in on it

        • s0s has a chewy nougat center says:

          Promise of future return, probably.

          A business may make a very small percentage on the dollar for the Groupons that they sell, but a stable enough business would likely consider that a reasonable sacrifice of profit if it means providing a deal to bring new customers in. Someone goes in on a Groupon, and they really like the food/service/whatever, they may just make up and exceed the lost profit for that visit with return business, not to mention positive online reviews and word-of-mouth advertising.

          Of course, it’s a double-edged sword for stupid business owners. More than one business has ended up in trouble because they weren’t large or stable or profitable enough to be able to withstand that period of diminished return after putting a Groupon out — IIRC, at least one wasn’t able to turn enough profit during the period to pay its employees.

          • Kate says:

            The expense for Groupon is the advertising and they do a lot of it. The benefit to the business is focused advertisement.

  11. tooluser says:

    Google is evil.

    I presume any coupon they issue will track me to every detail they can collect, and such information will be sold to people who want to take my money or rip me off in some way.

    No thanks.

  12. Cosmo_Kramer says:

    I’ll laugh if Google kick’s Groupon’s ass.

    FYI Groupon, when you prompted me to enter my e-mail address I didn’t expect you to subscribe me to 3 mailing lists. Maybe that’s something you should have mentioned ahead of time? And maybe you should have given me the option to opt out? That video you had on the unsubscribe screen was clever, but fuck you for making me unsubscribe from mailing lists that I never wanted to subscribe to in the first place. Assholes.

  13. toxicXchocobo says:

    Shouldn’t matter too much. There’s already other services like Groupon (Living Social for example) so short of Google being douches and offering the precise same thing, it’ll be nice having three choices daily. Kinda glad they didn’t accept Google’s offer personally.

  14. drburk says:

    I’d like to be one of the first to say that Groupon is slowly dying. 5 of the 7 deals the past week were for massages, facials, manicures etc. People only want so many of these things before they stop buying and stop paying attention. Groupon needs to figure out what people need and run those deals.

  15. Disoriented says:

    In Google we trust!

  16. smartmuffin says:

    Seems like this will probably be the final nail in the coffin for Groupon. Google may not create as good of a service, but they’ve got the name recognition and will be able to attract more and better companies to participate. Groupon should have taken the money while they still could.

  17. Pig_Farmington says:

    To Google: It’s call spreading yourself too thin.

  18. Nic715 says:

    Please tell me Google will actually have enough “enticing” deals to send 7 days a week no matter where you’re located….if I see another “58% Off Panoramic Wall Mural” or “65% Off at Canvas on Demand” filler deal I may SCREAM! I actually look forward to opening my email and seeing what goodies Groupon or LivingSocial may throw my way…and being female, I don’t mind the salon/spa offerings (though, I’ve only purchased restaurant deals) but I can’t STAND the stupid “deals” they throw in when they have nothing to offer that day……..I’d much rather they send NOTHING than to open my inbox and see it littered with junk offers.

    In the future, as more of these deal-a-day type things show up, I would like to see ones with options…like check the box next to the type of deal you’d be interested in. So, I want to see restaurants, bars, stores, salons, local events. Not interested in panoramic over-the-couch art, carpet cleaning, anything relating to children/family fun or services for the home I don’t own. Maybe throw in a random deal from someone who handed over more advertising money every so often (I get it, it’s business/marketing, you have to make a profit somehow.) but perhaps take a cue from sites like Stumbleupon….”show me more deals like this”/”never show me crap like this again”. Thumbs up/down……..that sort of thing. Personalize my experience and I’m much more likely to keep checking in/purchase more.

  19. Griking says:

    Instead of making people clip and sign up to silly websites to get coupons perhaps these small businesses should just lower their prices and advertise better.

  20. witeowl says:

    Ah, yes. Great-gramps used to say that all the time. People just wrote him off as crazy. Who’s laughing now, eh?

    Oh, and kudos on using the correct word, “tack”. Well done. :)

  21. RogueWarrior65 says:

    I seriously hope that in this one case Groupon has a patent on the business method because Google is getting a little to arrogant for its own good.

  22. Kibit says:

    I find better local deals on the daily deal site that my local paper does. I like that you can buy the deal right away. You don’t have to wait and hope that other people will buy it.

    Check and see if your local paper has something similar.

    BoCoDeals.com

  23. Kibit says:

    I like this blog. It shows you what type of deals Groupon has nationally.

    http://hintsofgreen.blogspot.com/

  24. caradrake says:

    I liked when Redbox did their groupon deal – 3 rentals for $1. But every time we’ve stopped by a redbox machine, we haven’t found anything we want to watch! Took part in the Amazon $20 gift card for $10 on LivingSocial this past week, too. And we got a museum family membership for about 25% of the normal cost.

    I don’t really go in for the food deals, since restaurant.com usually offers a better selection and better prices. And I have no interest in the spa/massage packages, or hotels.

    I look forward to seeing Google’s service, hopefully they have some deals that are appealing to us :)

    I’d especially love to see more of the Amazon deals!

  25. Chaosium says:

    I’ve used Groupon a few times but I feel a little “cheap” and exploitative doing so, and I imagine there are a TON of garage sale hagglers who screw up the system and make the process miserable for the shopowners. They should have sold, I can’t see this being a billion dollar a year business, especially with Yelp, Google, and a thousand others in the market.

    • AndyfromIL says:

      Exactly, I am sure much of the staff hate you when you area part of the surge going thru a restaurant. I try my best to not use coupons out of empathy for staff and owners of small business, I would hate to happen upon a place getting overwhelmed with 70-90% off freeloaders, service must suffer in most cases.

      From the friends I know that use this stuff, they are hit and run customers in restaurants, not loyal at all(in a big city with thousands of choices, this can work for them) I don’t see the future in extreme coupon-ing methods like Groupon, but I have been plenty wrong before..

      • Chaosium says:

        Yeah, I try and be reasonable but I always hated it when I was a server and customers came in with coupons, sure, everyone who posts on Consumerist amazingly overtips on the original amount, but the vast majority of people in my reality were cheap, on fixed income, and looking to cut their costs as much as possible. While often regular customers they were rarely nice, profitable, or welcome beyond the manager’s insistence that all business is good business. Yecch.

  26. gman863 says:

    I agree with previous statements regarding issues with services like Groupon.

    First, many of the offers are suspect. Assuming I wanted a massage or spa visit, the claim of “50% Off” begs the question: 50% off what? Given Kohl’s, JC Penny and most local jewelry stores claim items are 50% off every week, it leads me to belive a reasonable consumer would be whacked out if they actually paid the listed “retail” price for the item or service.

    Second, merchants have ended up burning themselves with Groupon-type offers. Many restaurants have run deep discount coupons below their actual cost of serving the food. When the Groupon goes out, they are hit with a tsumani of customers – in some cases so many they cannot handle the sudden influx of customers. The business loses money, customers are pissed off due to the restaurant’s inability to handle the spike in business (bad word-of-mouth, no repeat business) and the waitstaff is pissed since many people base the tip on the Groupon price instead of the actual value of the meal.

    Another issue is fine print in some offers. Restaurant.com is a good example: Getting a $25 gift certificate for $5 sounds good until you read “minimum purchase excluding alcohol $50, one gift certificate per party.” In reality, you’re not getting 80% off a $25 tab; you’re getting (at most) 40% off if the check is exactly $50 (excluding alcohol, tax and tips). For singles and couples, the menu prices may not add up to this unless one pigs out on high-calorie (and high profit) appetizers and desserts.

    The offers I like best are the ones with few (if any) strings attached. One of the best pizza places in Houston offers a $12.99 large pizza for $5.99 on Mondays (their slowest day). The catch? Pick-up only, cash only. Other places (like Papa’s BBQ) have $4.99 dinner specials (usually $9-$10) on slower nights. No coupons, text messages or bullshit.

  27. Larraque eats babies says:

    I like Google’s approach. Every time I see a deal on groupon and I can’t buy it, I just wish I would’ve launched a competing service instead.

  28. davidsco says:

    Yes, because we NEED 10,000 MORE clones of this same idea

  29. Loias supports harsher punishments against corporations says:

    If you can’t join ‘em, beat ‘em.

  30. HungryHippo says:

    That’s a massive monster that Groupon is now gonna have to fight. Google has so much money, it could just pay off all the current and potential vendors to go with Google next time or offer them more incentives than Groupon has. Google strategy could drop prices lower than cost to kill Groupon competition Wal-Mart style.. since it was offering Groupon 6 bil to buy, it could just put in 3 bil to vendors to eternally switch over like Ticketmaster or towards below cost offerings and push out Groupon completely.. and prohibit Groupon app in droid marketplace..