A few days ago I almost bought a travel package online: the deal was 50 percent off a three-day, two-night stay in Vietnam. Today’s tempting offer is half off food and drinks at a gourmet restaurant in the Fort. I wouldn’t call myself a shopaholic — especially not on the Net — but never has my finger been so poised to click the “Buy now!” button, and it’s all Groupon’s fault.
You might have heard of Groupon by now. In 2010 Forbes magazine named it “the fastest-growing company in Web history” — even faster than Facebook and Google — and while it took a company like Apple eight years to pull in US$1 billion in revenue, it took Groupon a little over two years.
So what’s the big deal about Groupon? “Deal,” is, in fact, the operative word at this booming dotcom, whose name combines “group” and “coupon.” Founded in 2008 by 29-year-old American Andrew Mason, Groupon offers Internet shoppers one or more deeply discounted deals per day — usually 50 percent off products or services at restaurants, resorts, spas, salons and stores. So sweet are the deals that Groupon became one of Oprah’s Top 10 Picks.
Like an eBay auction, though, there’s a time limit: if a certain number of people don’t buy the deal within a day, for instance, it doesn’t “tip,” meaning no one gets the deal.
Welcome to the world of collective buying.
“We are the pioneering company that came up with the tagline ‘group buying,’” says Lori Villafuerte, president of Groupon Philippines. “Our goal is to revolutionize the way people shop in the Philippines. People just really want deals.”
Villafuerte, 35, started Groupon last February with business partner Anna Saenz, 35, her childhood best friend from Camarines Sur. Five months after launch, the website has over half a million subscribers (close to 61,000 “likes” on Facebook) and is rapidly growing. Sign up and you get the inside track on daily deals in Metro Manila, which they’ll e-mail to you.
“We’re also live in Cebu,” says Saenz, “and will launch Davao and Iloilo soon.”
Groupon typically splits sales 50-50 with its vendors. There’s no upfront cost to be featured, so merchants tie up with them for the brand exposure: “We bring customers to their door instantly and you can track it, whereas if you were to place an ad in a newspaper or billboard you can’t really track the traffic,” she claims. “If we were to feature you and you sell zero, you still won, because you didn’t pay us anything. You only get a cut when you sell.”
Locally, Villafuerte and Saenz have found that discounted food sells the fastest, especially buffets and diner-type American fare. Though they occasionally offer retail, like a recent deal on Crocs footwear, Groupon Philippines considers itself more of a lifestyle guide. “Sixty percent of what we feature is food and wellness because people always need to eat, get a massage, get a haircut,” Lori says. “We also feature travel, classes — usually things you’ve always wanted to do but don’t have the money or time for.”
A recent deal featuring LASIK surgery for half off (P30,000 down from P60,000) sold so well — 75 customers bought within 24 hours — that partner merchant Advanced Lasik Center could barely handle the demand. “Last year they did traditional marketing, paid thousands and thousands to market and got about 50 clients in a month. We gave them 75 in 24 hours,” Lori says.
Groupon doesn’t just feature anyone. A merchant has to have a good product and good customer service, first and foremost. It should also have a website or if not, a Facebook or Multiply page. “Otherwise it’s hard to sell them online because people do their homework,” Lori says. “They want to see what else they sell.” Location is also key. If Groupon features a new place in Batangas, for example, they check the place out first to make sure it’s an aspirational experience: “People will travel there, so what’s the catch? When we structure our deals we make sure that it’s worth it.”
Lori is the youngest sister of Camarines Sur Governor Lray Villafuerte, the enterprising politician who put CamSur on the Philippine tourist map. (Anna also worked with the governor, at the CamSur Watersports Complex.) Originally a chef who trained at the Culinary Institute of America, it wasn’t long before Lori displayed an equally fierce entrepreneurial streak. Her career working at top New York City restaurants took a detour shortly before 9/11. Needing a change from the long hours in the kitchen, Lori applied for two jobs: one at Bliss Spa, the other at Windows on the World, the restaurant on the top floor of one of the World Trade Center towers. Fortunately for everyone concerned, Bliss Spa contacted and accepted her first.
“Windows on the World actually offered me the job, but two weeks later 9/11 happened,” recalls Lori. “It was meant to be.”
Under the tutelage of Bliss’s Marcia Kilgore, Lori opened spas all over the States and became chummy with the spa’s roster of celebrity clients. “Liv Tyler’s my best friend, she’d always go to the spa,” she says. “Kate Hudson, Britney Spears, Keanu Reeves … I never imagined I’d see all these stars, living in the Philippines growing up. We treated them like normal people. Jessica Alba is really nice. All the girls in Charlie’s Angels … Drew Barrymore’s super-nice. Jake Gyllenhaal used to go a lot when he was still dorky. The stars won’t make an appointment. If they’re in the area they just come in. If Brad Pitt came in I didn’t care who was there, I’d just say yes. He’s hot. And Angelina Jolie is very hot. They’re both nice.”
After eight years at Bliss, Kilgore made Lori head of Southeast Asia. She moved to Singapore to open a spa there last year, but found that not many Asians had heard of Bliss Spa. With limited funds for marketing, she was wondering whether to spend on newspaper or magazine advertising when Karl Chong of Beeconomic approached her. Beeconomic was a Singaporean website patterned directly after Groupon USA.
“Karl introduced the whole concept, so I did it and really liked it. I featured a facial for half off, from S$120 to $60. After a day I had 300 new customers, and 50 percent of them actually came back again.”
While Chong was pitching to her, Lori said, “We should bring this to the Philippines.” So she quit Bliss last August and, with Karl, who was now her friend, co-founded Beeconomic here in November. After a month, while she was still setting up, Groupon called. “They were calling the top Groupon sites all over the world. We met in Hong Kong and everything happened all in one day — they bought Singapore and the Philippines at the same time.”
Groupon’s office on Pasong Tamo looks like a fun place to work. Their team, which started with three people and ballooned to 60 within three months, is young, hip, and Internet-savvy. There’s a dartboard, an expansive green lobby where staff can congregate to order pizza, and they actually get paid to Facebook, though some of them are so busy doing research on the Web that they forget to Facebook. Lori presides over everyone as the Queen Bee (a holdover from her Beeconomic days), but they follow the American business model in that no one calls her “Ma’am,” (“My name’s Lori”) and everyone has a say, no matter where they are in the office hierarchy.
“We have an open-door policy,” says Anna. “We want people to have a voice, like if you have an opinion, speak up.”
When structuring deals, Lori, Anna and their staff handle everything from start to finish. All the merchant has to do is come up with a really good deal and make sure they take care of clients who buy in. Groupon has departments for customer service and partner management that take care of both consumers and merchants, so it’s a two-way street. “At the end of the day we tell them, ‘Hey, your brand’s at stake, our brand’s at stake, so you have to make sure you make customers happy.’”
And that’s perhaps one of the most important services Groupon is providing the Philippines: good customer service, not only from themselves but also from their partner merchants. “If we messed up, we admit we messed up,” says Lori, who still answers customer-service inquiries on a daily basis. “We’re following the US business model. Especially me, I came from the hospitality industry for 16 years, so it’s really important. Because we have a Groupon promise and it’s a global thing: If in any way we disappoint you or did not make you happy, we give you your money back with no questions asked. Ninety-five percent of the time everyone’s happy.”
The site offers three to four new deals a day now, plans to open offices and live pages in Davao and Iloilo, and has even started partnering with global vendors like Photobook. “We only sell things we really like, if we ourselves would buy it,” says Lori. “All my staff, half our paycheck goes to Groupon. We really love our deals.”
Though she misses life in New York, she thinks the opportunity here is too good to miss. “Especially with the recession right now in the States, the people I know there are looking for jobs in Asia and moving here. And people like me who lived and grew up in the States, we’re all coming back. Asia’s the place to be right now.”
On one of her frequent forays back to the US Lori actually met Groupon founder Andrew Mason. “He’s a down to earth, laidback guy,” she says, “Very inspiring. What I got from him is hire the best people that you can find out there: smart, young, and make sure they actually make a difference with what you’re doing, and that’s exactly our philosophy as well. We want to make a difference, not just have a business.”
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Check out today’s deal at www.beeconomic.com.ph or “like” the Groupon Philippines page on Facebook.