Group Buying By the NumbersJim Moran | @jdmoran | blog.yipit.com

BIA/Kelsey ILM East: Wednesday, March 23

THE MARKET

Low Barriers to Entry…

Source: Needham & Company LLC (Mark’s whiteboard)

…High Barriers to ScaleThe Virtuous Cycle of Daily Deals

More Sales

More Conversions

More Deal Personalizatio

n

More Deals

More Subscribers

Improved Media Buying

More Salespeople

More Cities

The Daily Deal Stack

MERCHANTS

CO

NSUMERS

Daily Deal Sites

Merchant Services

SOON…Merchant Agencies

Consumer Services Aggregators

White Label Publishers

Vertical Deal Sites

Data

Exchanges

TOP 20 MARKETS: FEBRUARY DATA

February Leaderboard

Source: Yipit Data (http://yipit.com/data)

Site Count Avg. Sold Revenue Revenue/DealGroupon 2,116 730 $39,007,032 $18,584LivingSocial 627 629 $11,676,824 $20,029BuyWithMe 353 ? ? ?Gilt City 324 ? ? ?Travelzoo Local Deals 105 599 $2,974,498 $36,274DealFind 47 600 $1,193,129 $25,938WagJag 58 564 $1,004,956 $17,327

Top February Offer

Dealfind (Toronto)The Butchers – 69% off$627K revenue11,404 soldRevenue Index: 18.5x

Source: Yipit Data (http://yipit.com/data)

Revenue Varies by Category

Source: Yipit Data (http://yipit.com/data)

Price for Revenue OR Volume

Source: Yipit Data (http://yipit.com/data)

MERCHANT ECONOMICS

Breakage Rate ≤20%

Recent data on Groupon is consistent: (i) breakage of 10% (TechCrunch, 8/14/10), and (ii) 20% redemption in month 1 and 15% redemption in month 12 (Chicago Tribune 8/16/10).

Profitable at 19% Retention

Assumptions from industry research and Yipit phone survey of SMBs who have completed a Daily Deal in the last 12 months. 80 responses.

Merchant Profitability Per Voucher

Drivers Gross Profit / VoucherDeal Assumptions Existing CustomersDeal Value $50 Revenue from Groupon $2.2

Deal Discount 50% Revenue from Overage1 1.1Deal Price $25 Revenue from Existing Customers 3.2Overage % 14% Less: COGS 3.4Commission % 40% Less: Cannabalized GP 1.8Cost of Goods Sold % 40% GP from Existing Customers ($2.0)Credit Card Fee % 2.5%

GP from Breakage $2.9Buyer Mix AssumptionsUnredeemed (Breakage) % 20% New CustomersCurrent Customer % 20% Revenue from Groupon $8.6

New Customer % 60% Revenue from Overage1 4.2Revenue from Existing Customers 12.8

Repeat Visitor Assumptions Less: COGS 13.7

Conversion to Repeat %23 19% GP from Existing Customers ($0.9)Repeat Visits 3Vouchers per Customer 1.5 New Repeat CustomersCurrent Customers Already Going % 25% Revenue from Repeat Customers $13.0

Less: COGS 5.2GP from Existing Customers $7.8

Incremental GP / Voucher $7.9

High Merchant SatisfactionWould You Use a Daily Deal Site for Another Promo-

tion?

Yes 93%No 7%

Data from Yipit phone survey of SMBs who have completed a Daily Deal in the last 12 months. 80 responses.Groupon’s reports repeat interest at 97% (grouponworks.com)

Shifting Ad SpendReducing Other Advertising Spend After Running Daily Deal

Yes 43%No 57%

Data from Yipit phone survey of SMBs who have completed a Daily Deal in the last 12 months. 80 responses.

THANK YOU

About Yipit“Kayak.com” for Daily DealsPersonalized based on where you are and what you like

Yipit API>10K Daily Deals per month from 400 Daily Deal servicesyipit.com/about/api

Yipit DataPast offer details and competitive analysisyipit.com/data

Thank You

blog.yipit.com@jdmoran