It appears there’s no end to the number of startups the group-buying space can contain. The latest entrant offering a better mousetrap is PeopleDeals, which allows small and medium-sized businesses to create deals that increase in value the more they’re shared across social networks.
Whereas Groupon-type deals are basically a two-for-one model that doesn’t change, PeopleDeals makes the price cheaper after a certain number of participants share the virtual coupon across social platforms such as Facebook and Twitter. To illustrate, a pizza joint could offer an online deal for 50 cents off a slice, then as soon as it’s shared with another person it increases to 60 cents and then to 70 cents after it’s shared five more times, up to a maximum of $1 when 20 or more people share it.
“The key is the business owner decides. At any given time they can make it go from 50 cents to $5, or from 50 cents to 70 cents,” said Darin Myman, the CEO of Red Bank, New Jersey-based social network PeopleString Corporation (PLPE.OB), which launched PeopleDeals last week. “When they (customers) share it with their friends and their friends share it they’re becoming your new social media.”
PeopleString, which Myman said originally raised $500,000 from friends and family when it launched two years ago, began trading on the secondary market in January, which “allowed us to get into the market in a timely fashion.” He added the company now has 1,100 sales reps, a million users and is already profitable.
Myman said PeopleDeals is a more cost-effective way for small businesses to use social coupons, as it charges merchants a subscription fee of $80 a month or $649 a year that lets them run a maximum of 10 deals simultaneously (they are charged more for each additional deal above 10). A typical Groupon deal for a $25 coupon that nets them $50 worth of food, ends up costing the merchant $12.50. Should the deal explode in popularity, the business owner is able to stop it immediately or keep increasing the discount.