TeamBuy: a Canadian Groupon

Written by Zaki Usman.

Yesterday, I came across an interesting episode of Dragon’s Den about a company called Teambuy. It’s the Canadian version of Groupon. You know the site that lets you get things at incredibly discounted prices (+50% off retail.)

What about Groupon and LivingSocial?

During the show, no one spoke about competition? Yet invested $150K into Teambuy? I think between Groupon and LivingSocial this market is pretty much shut airtight. I’ve nothing against Teambuy, I had a look at their site and it looks pretty good. But I doubt the $150K investment would go far against the $950 million that Groupon just raised.  That’s right! Groupon, the 2 year old company became the first startup to get nearly a billion in VC funding! And this was right after declining separate offers from Yahoo and Google worth billions of dollars.

Groupon Business Model

The question is how did Groupon, such a young startup get so far and so quickly? Other than a good team, talent and hard work, it’s also a cool business model. Let me elaborate on this:
  • The idea behind Groupon is very simple and easy to understand.
  • It revolves around selling something that has reoccurring purchases (mostly services). For example you go to a restaurant for half price. If you enjoy your time there, you’ll likely revisit.
  • The restaurant may take an initial hit because of the discount. But it saves on the marketing cost of acquiring a new customer.
  • The restaurant doesn’t have to worry about where to advertise, how to implement a new campaign, and how to convert leads to sales. It’s hassle free, almost turn-key marketing.
  • Also, it guarantees a minimum number of paying customers (not just leads) or else it doesn’t pay a thing! What kind of marketing program does that?
  • Services that require social interaction, geared towards urban lifestyle tend to do well. Also since most of the offers are for services, you get the local factor. For example, why would you travel to another city to go to a Gym?
  • It driven by an important consumer emotion – low prices. Something anyone can quantify and appreciate. No explanation required!

Barrier to entry Strategy

Teambuy enjoys the same advantages as Groupon because of the same business model, but TeamBuy came to the party a bit too late. The only option is to focus on a market niche that has barrier to entry for the likes of  Groupon/LivingSocial. That’s been the strategy of international vendors such as SoSasta, an Indian based service. With language and cultural barriers, it made more sense for Groupon to buyout SoSasta than to compete against it in India. Similarly, TeamBuy should work on a market that GroupOn may have a harder time carving out as an outsider.

Originally posted 2011-01-13 18:24:25.

About the Author 

I blog about whats new and cool on the web, marketing and mobile business. Send me a tweet to connect with me.

Comments (28)

  • TeamGuy Jason

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    Hi Zaki,

    Thank you for mentioning TeamBuy in your article, we appreciate it. There is a common misconception regarding facts aired on The Dragon’s Den. The episodes go live 6 months after they are filmed and in this fast paced industry, our company had changed a great deal. On the show it said we were the first to utilize this model in Canada which is true, but when the nation saw this episode we were actually in 11 cities across Canada not 1. It is hard competing against these large companies like Groupon and Living Social, but we continue to quickly grow month over month, and we’ve stayed on par. TeamBuy has a lot of hope for David in this friendly battle with goliath.

    Reply

  • Zaki Usman

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    I understand. I still think you need a bit of a niche market to carve out to protect yourself from the bigger guys. Wish you good luck!

    Reply

    • SocialBuyer

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      Has anyone used Teambuy before? What have your results been?

      Reply

    • Tracy

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      Why do all these social buying sites have “register with an email” screen before you can use them. So annoying!

      Reply

      • Zaki Usman

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        True, but you can bypass that by clicking on the home/logo. I am sure the majority dont know this and either bounce or give their email address.

        Reply

  • Tina

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    Cool thanks for the link Zaki. Gota try it out!

    Reply

  • Ali M

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    I have never used these guys before. I have found fairly decent deals on Groupon for Calgary. Love the savings!

    Reply

  • Jean-Guy

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    These sites are just around waiting to be bought by the bigger ones. Pretty soon you’ll see consolidation.

    Reply

  • Chelsea Quinn

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    Kijiji is also offering Daily Deals in major cities across Canada – cool help for small business. ‘-)

    Reply

  • karen

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    I like that teambuy responded here, gives a bit more info. I’m wondering how any of these sites can survive with so much competition and I haven’t heard a lot from business owners saying it’s worked out well for them. I’ve actually noticed that some businesses can’t handle the sudden spike in business and then awful lousy service that doesn’t inspire people to go back.
    I agree with Zaki- a niche would be good. And maybe a little less chemical peeling and laser hair removal..
    Does Teambuy do charity offerings? I work for the Red Cross – possible collaboration?

    Reply

  • Sean

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    Great article Zaki, your idea of creating a niche market is a good one, there are a few daily deal companies that have taken this route – Ethical Deals and Good News focus on deals from companies who are eco friendly or charitable.

    With so many daily deal sites popping up to compete with Groupon and Living Social, we found it hard to keep track of all the deals and were inundated with emails from all the different websites. We created http://www.DealByDay.com to consolidate all of the local daily deals onto one easy to use website, you can also subscribe to the daily newsletter and even customize it to only see deals that you are interested in!

    Cheers,

    Sean
    Founder – DealByDay.com

    Reply

    • Zaki Usman

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      Yeah, deal aggregators are good, but they don’t address the underlying issue with group buying. Most people are looking for a good deal, not necessairly building a loyality to a merchant. So you’ll see merchants lose out initally since they dont get return traffic (buyers will flock to the next best deal). After which merchants will come up ways to retain traffic (i.e. combining location based mobile devices for redeeming coupons, etc) or reduce their discounts so as to remove marketing costs from the offer, not the cost of the service. Interesting times ahead, no doubt.

      Reply

  • John Marshall

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    So much teambuy mentions.. They are over rated and provide horrible customer service. There are 30 other CANADIAN companies out there who actually know how to do business with customers and merchants. I do not recommend Teambuy at all solely based on my experiences.

    Reply

    • Zaki Usman

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      John, too bad you had a bad experience with Teambuy. Do you use other services such as Groupon or Livingsocial? What do you think of them?

      Reply

    • k

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      I agree John!
      Their customer service is really beyond horrible. If you send an email you will never get a response. If you call you get put on hold for 5 minutes or more and then the line cuts out.
      When I finally got to talk to a person and explained that a merchant had very rudely refused to honour my teambuy voucher for the amount I’d paid, I was offered credit by way of “Teambuy bucks”. I said I want my money back, since I had to pay full price already at the place I’d tried to use the voucher. The lady said she was starting a case file for me, found my email and said I’d get a response in a few days.
      I called back a week later and there was no record of my email, phone call or my having ever made a complaint. The guy didn’t even apologize, he just said that they don’t record their calls and there was nothing he could do and I should have gotten the girl’s name. He told me I could not get a refund and all I could have was Teambuy bucks.

      I don’t want teambuy bucks!! I want my money back!! This is violating Canadian policies regarding fake or misleading advertisements. If you advertise that the amount paid on a voucher never expires then either the merchant needs to honour the deal or teambuy needs to give me my freaking money back!!
      Their customer service also flat out lied to me and pretended to “create a case file” just to get me off the phone. They rely on people getting fed up with the process and giving up.

      Reply

  • TdotTen

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    I’m not sure if Teambuy is the best one in the market, but they seem to get a lot of publicity, especially with that Dragon’s den show.

    Reply

  • Scott

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    I have used TEAMBUY recently and everything went smoothly. Great deals and great savings. TEAMBUY has grown quite a bit since seen on Dragon’s Den. They are now in almost 40 Canadian cities from coast to coast. I prefer TEAMBUY as well because of the fact they are in smaller cities; not just Toronto-GTA, but Brampton, Mississauga, Guelph, Windsor ect. It’s great to see a Canadian start-up do well these days … lets buy Canadian!

    Reply

  • Tam

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    If you love deals check out barcideals.com, they are a new Canadian daily deal site, and are going to be selling products too.
    Spread the word and lets help all the small guys!!!!!!!!!!!!!

    Reply

  • K

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    There is no doubt that Teambuy has done a fantastic job of expanding, and rapidly at that. With growing competition from large, well established, players, it will be interesting to see the industry take form and evolve.

    Cheers,

    K
    Offeron.com

    Reply

  • Bruce

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    Has anyone had any negative experiences with these guys? I want to know if they are any good.

    Reply

    • Brock Coutts

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      Horrible experience

      I purchased one of the team buy items in September that had an expiry date of Dec 1/11. I ordered the product from the featured company on November 11 and as of yet nothing – the 1-800 number from the company iSkinMedix is not in service AND after being on hold with Teambuy customer experience (yes some experience) for 40 minutes I gave up and sent an email.

      Reply

  • Marilyn

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    My groupon is worth $69.99 for Toms shoes. Why am I being charged $9.00.

    Reply

  • Joe

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    Hi there,

    I would not recommand teambuy. I bought three services from them and requested refund for all of them, mainly due to weak companies posting on their site that can’t perform the services sold. It’s also taking forever to get reimbursement. They tried with an initial scam by telling me that they can’t reimburse me but can give me a credit for another bad service they sell. Make sure to ask for full refund as you are entitled to it.

    Reply

  • Joey

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    I can see two problems with Teambuy.ca which they will have to fix if they want to stay in the game. One is their shipping charges. One product, LED bike lights costs $9 and shipping is $5. You order two sets for $18 and end up paying $10 shipping total $28. Yes, you pay shipping for each product you order. BTW – these are 4 small LED lights. I found them on Amazon – a 10pack for $15 including shipping. So for half the Teambuy price, I got two extra lights and the product is exactly the same.
    The other issue is turn around. Average time to get these product is 3-5 weeks which is poor. My Amazon order came within a week.

    Reply

  • joe

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    Any implication for the merger of Teambuy.ca and Dealfind.com?

    Reply

  • Vivien Lee

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    I bought Mobil1 oil change in Richmond BC through Teambuy and tried to use this service. Mobil1 said that they were not getting paid by Teambuy and could not honor this service. I emailed Teambuy and they replied that they could not do a refund after 7 days. Crazy poor customer service! I got my refund through my credit card company.

    Reply

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