GroupPrice targets small business with daily deals
Price and value is what led Chris Gafoor to purchase a press release distribution plan from GroupPrice.
“It gives you more bang for your buck,” said the president and CEO of Miami-based BluStar Media Inc, who paid $39 for a GroupPrice deal that he estimated would have cost $200 elsewhere. The deal guaranteed Gafoor’s company a minimum of 5,000 views of its press release in 30 days.
GroupPrice is a business-to-business version of the group-buying trend that offers deals specifically for Internet-based small businesses. Van Jepson, CEO of the Redwood City, California-based firm, got the idea for the business when he ran a previous Web company.
“I was trying to grow the type of online services that were offered to our members, but I didn’t have enough resources,” he said. “So I had to reach out to outside suppliers, local service suppliers and office suppliers to find solutions. I realized that this was a problem that all Internet-centric companies have.”
Jepson initially funded the website with $30,000 before attracting five investors. GroupPrice subsequently attracted $285,000 of funding. The startup closed its first seed investment last July.
GroupPrice publically launched in January and targets online companies with up to 25 employees. Jepson said there are five million such companies in the U.S. and one million such merchants.
Despite its slogan, “Daily Deals for Your Business,” GroupPrice’s packages are available for one week.
“What we do is post a daily deal, but we found small businesses need one week to make a final decision,” said Jepson, adding small businesses need time to evaluate the deals. “If one person buys that’s fine with us; ten is better.”
Jepson won’t give specific numbers, but noted the website’s monthly traffic has been growing at a 90-percent clip since launch. GroupPrice’s goal this year is to get 3,400 small businesses and 150 merchants to use the website.
GroupPrice makes money by being able to keep 15 to 20 percent of a deal’s revenue because it cuts the merchants’ cost of acquisition in half.
“Our current average selling price is $250 and we give on average a 50-percent discount to the person buying it,” said Jepson. “It leaves about $125 for us and the merchant to share.”