“When people look at this space they see it as a zero-sum game,” said Payne, who has heard all the naysayers since launching his Atlanta-based company last year. “They see it as Groupon’s raised a billion dollars in private capital and some (other) companies have raised one, or ten or twenty (million)… how can they compete?”
Payne said the group-buying, or “local,” space is large enough to accommodate newcomers such as Scoutmob, DailyCandy, Gilt City, SCVNGR, GroupPrice and others. He added that Scoutmob is part of this “next wave” of deal sites that are following in Groupon’s oversized footsteps and changing the business model to better suit their clients.
“I think what’s happening is that Groupon started allowing local merchants to really monetize and drive traffic in a measurable way and that was a baby step into something much larger,” said Payne, whose service uses Groupon-type deals, but makes them free to consumers and charges business owners $2 per converted customer, compared to the 50-percent cut taken by Groupon (on a typical $25-for-$50-worth-of-food coupon, Groupon pockets $12.50).