Group buy coupon websites can’t stop multiplying in Canada

grouponDaily deals are making deals of their own this week, with the launch of two new Canadian group buy websites, both hoping to take advantage of 2010's social shopping trend.

Kijiji Daily Deals, launching Tuesday, is a partnership between Toronto-based startup TeamSave and the eBay-owned classified website.

SwarmJam, a company based in Vancouver, will formally launch Wednesday in association with broadsheet newspapers across the country owned by Postmedia Network.

The enthusiasm for these ventures, primarily offering in-person discounts from local businesses with the purchase of an online coupon, was spawned by the runaway success of Groupon, which launched in Chicago in Nov. 2008, followed by expansion into markets around the world.

Reputable rumours spread Monday that Groupon was aquired by Google for $2.5 billion.

Groupon's concept exploited the emergence of social media, particularly Facebook, to become the fastest-growing business of all-time. Daily deals, mostly limited-time offers, are only triggered once a minimum number of people sign up. Coupons are accompanied by a comment thread where contemplative buyers can ask questions about the offer.

The imitators multiplied like rabbits, including a couple of Toronto-based companies, TeamBuy and Webpiggy, while other American ventures like LivingSocial branched out to Canadian markets.

Newspaper publishers were also swept up in the mania, rather than risk the loss of coveted local advertisers to daily deal startups.

WagJag, owned by Torstar, was launched in February to take advantage of existing relationships with local businesses, helping them target the daily deal crowd online.

Yet, when the Toronto Star experimented with selling promotional Saturday subscriptions, they opted to offer them through Groupon.

Many of the product categories turning up on social shopping sites for the first time still consider it an unproven experiment, however.

Daily deals don't work for everyone, though. Restaurants have complained of being overwhelmed by coupon-buyers who turned out to be bad tippers, and never came back to spend more. A study from Rice University in Houston concluded that salons and spas were the greatest beneficiaries of the group buy approach, and suggested businesses be more strategic with their offers.

But can every city in Canada support an infinite number of coupon websites? Naturally, aggregators like Dealradar and dealbriefing have turned up to gather all local offers in one place. Chris Nguyen, co-founder of TeamSave, told the Financial Post that he thinks each local market can support as many daily deal offers as there are magazines on a newsstand.