GroupPrice targets small business with daily deals

April 13, 2011

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.”

5 comments

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This sounds a lot like another website I’ve been to called BizyDeal. What I like about BizyDeal is that it offers a wide variety of deals from cars to reducing processing fees on credit cards (today’s offer). I think it’s great that companies are finally applying some of the consumer oriented website models to the B2B audience. The purchasing power of this audience is a huge opportunity.

Posted by ArsenalFan | Report as abusive

Sharon,

Great post on a niche market within the “Groupon” or “Livingsocial” concept. Clearly there is a market for B2C companies to attract new business in hopes the end result will be a lifetime customer. Why can’t it work in a B2B setting as well? Time will tell whether this business is sustainable, but I believe it is.

GroupPrice is not alone in the market. Bizydeal.com, another Chicago-based startup, is getting some traction and is selling out of its initial offerings.

Great stuff in an ever evolving marketing world!

Kind Regards,
Stuart McMullin

Posted by stuartmcmullin | Report as abusive

[...] GroupPrice targets small business with daily deals … Businesschris, chris-gafoor, group, press-release ← Plastic Surgery And The Different [...]

This is a growing sector in the “deal” business. I also like BizyDeal as it was created by B2B experts which adds a distinct relevance with a great chance of success.

Posted by JKuehl | Report as abusive

Good read on B2B deal sites modeled on the group buying experience and success of Groupon et. al.

Since half of most small business budgets are spent on repeat purchases it only makes sense that “Groupon for business” type sites are going to be a fast growing category. The creation of this new marketing channel for small businesses looking to acquire new customers as well as save money is a real win-win.

The trick will be to see who can offer the best experience on both sides; purchasing, and deal offering, and gain momentum and brand awareness.

To that end, let me throw my hat into the ring: BizSaves.com Where Business Saves. We’re in beta, have a lot of momentum and are growing fast.

Good luck to all of us.

Alec Hess, Co-Founder, BizSaves.com

Posted by ahess1 | Report as abusive

There are so many sites for b2b group buying and many of them following the footsteps of Groupon. I would like to add that http://www.huddlebuy.co.uk is another such site that provides exclusive group deals for small businesses in UK. The world of marketing is ever evolving and this venture is another stepping stone especially for SMEs that could not avail such deals that were earlier available only for large enterprises.

Posted by DavidWeasley | Report as abusive