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Site leverages power of group purchases

- The Washington Times - Wednesday, July 8, 2009

There's power in numbers. Nobody understands that better than the 20,000-plus members of Groupon.com -- a new online group coupon service -- in the District.

The basic idea is that Groupon.com features one great deal each day -- such as 50 percent off a one-night stay at a local hotel -- which will happen only if enough people sign up for it. (The number varies by day and deal.)

In other words, consumers don't get charged unless critical mass is achieved.

"The idea is to use collective buying power to benefit consumers," says Andrew Mason, the 28-year-old chief executive and founder of Groupon.com, which exists in 10 big cities, including Boston (45,000 subscribers) and Chicago (85,000 members), where it started in December. The District was added to the service in late May, and the most recent addition was Atlanta in June.

Groupon.com is a kind of modern take on the group discount, taking that traditional idea and extending it beyond museums, theaters and the like to a variety of new services from teeth whitening to restaurant deals.

The guys and girls at Groupon.com (all 45 employees are younger than 30) are delighted with the huge success of the service and site (Groupon.com receives a cut of each deal from the business owner) but say Groupon.com is more than just a coupon site.

"Everyone who works here believes in social change," Mr. Mason says. "We're looking for ways the collective of consumers can benefit the community."

In fact, Groupon.com grew out of an online company called the Point, which lets users start an online campaign to gauge whether there is enough monetary and other grass-roots interest for a certain cause before they invest more money and time in that particular cause.

It's a way to tell if you have critical mass, if you've reached the necessary "tipping point" (hence the name) to start an actual campaign-movement, Mr. Mason says.

A movement is exactly what Groupon.com has become, with tens of thousands of subscribers nationwide. But it's debatable whether users see themselves as part of social change or just smart consumers.

One thing is for sure, there are deals to be had:

"We highlight one thing a day and price it so that it's impossible to refuse," Mr. Mason says.

Joanna Robinson, owner of Lunar Massage (www.lunarmassagedc.com) in the District, discovered this firsthand. She was featured on Groupon.com in late May, and within a few hours, 500 people had signed up for the $30 dollar one-hour massage offer (value: $75).

"It's great exposure for a new business like mine," Ms. Robinson says. "Within a day, more than 12,000 subscribers knew about Lunar Massage."

(Since her business was featured, the site has received another 10,000 subscribers.)

Ms. Robinson's business, which opened in April, caters to young professionals and offers walk-in, 30-minute massages.

Consumers seem equally happy with the service.

Courtney Knapp of Petworth, for example, says she has signed up for at least five deals so far - everything from Pilates lessons to dog grooming services.

"It comes out to about one a week," she says. "I've been really impressed with it so far."

Aside from the good deals, she says, the site is helpful in highlighting new businesses to residents and visitors.

"I just found out about a restaurant in Petworth, where I live, through Groupon," she says.

The restaurant: Brightwood Bistro. The offer: A $15 gift certificate with a value of $35.

"I love the collective-bargaining-power idea; it's a great business model," she says. "And I love the nerd power of it."

Any downsides to it?

"I could run out of money," she says half jokingly.

Mr. Mason attributes some of the site's success to the recession.

"I think one of the reasons for our success is that people got used to certain luxuries" during better economic times, he says. "What Groupon does is allow people to do those things."

Such as stay at the Hyatt in downtown Chicago for $99 a night -- a recent featured deal. Or get teeth-whitening for $185 (value $600) -- a recent D.C. offer.

"It's amazing. We kind of did this on a whim," Mr. Mason says. "We had no idea it was going to take off like this. Now we're just trying to hold onto the reins."