Groupon may have paved the way for group buying websites, but the consumer focused giant has come under scrutiny regarding their model and the way they work with suppliers. Alex Harrington-Griffin, founder of Business Crayon explains why his new service is different from the ‘Groupon’ consumer model.
Alex explains: ”When BusinessCrayon decided to use the group buying model to help small businesses grow with less risk and cost, we started where Groupon went wrong” According to the new business group buying website that went live last week, these four points make their service different from Groupon:
1. Faster payments
Groupon holds supplier payments until the buyer has redeemed the offer - which may be up to 12 months. BusinessCrayon.com pays monies owed to suppliers five days after the offer ends.
2. Suppliers can cap an offer
Groupon hardly ever cap an offer. Although this may be the ideal situation for some businesses, not all have the infrastructure to fulfil an offer on an unlimited basis. As Alex says, “At businesscrayon.com, we encourage you to look at your existing capacity for new business and set realistic maximum sales. This leads to better buyer experiences and increased potential for repeat business.”
3. Insight in return on investment
With the consumer model, buyers are not able to see the ‘added value’ or return-on-investment for a new product or service. For businesses, trying a new way of marketing the company or using a new service to support operations allows the buyer to assess how their purchase can benefit their business. Buyers and suppliers will also build one to one relationships in the longer term, which increases the opportunity for loyalty and repeat custom.
4. Less e-mails, offers are available longer
Groupon sends at least two emails per day, with multiple deals in each. This reduces the exposure offered to the supplier and overloads subscribers with information. BusinessCrayon.com sends one email per week, featuring no more than two deals.
Groupon deals run for 48 hours. BusinessCrayon.com introductory offers are available for seven days, allowing the buyer sufficient time to research the industry, company and offering, or even meet with the supplier if necessary, as all deals are focused regionally.
So, just how does B2B group buying work? The new website of Mr Harrington-Griffin promise to offer exceptional deals negotiated with suppliers on the basis that they'll get exclusive access to large numbers of potential customers.
Only when a deal reaches the required number of SMEs willing to buy are they committed to fulfilling the offer at the price they’ve proposed, giving suppliers control over structuring a deal which covers overheads whilst acquiring new customers.
Group buying is a relatively low risk form of marketing, with guaranteed ROI in terms of immediate sales and then the opportunity to forge relationships with these new customers going forward.
From a ‘buyer’ perspective, by connecting a community of small businesses together B2B group buying sites give each company the buying power of a much larger organisation.
Time will tell if Business Crayon will be different from Groupon. Other group buying initiatives for businesses already started (Zone4Biz) or will be launched later this year.