December 14, 2011

PayPal to try to compete with Groupon, but will it matter?

Filed under: daily deals, groupon — Rakesh Agrawal @ 9:41 pm

PayPal is preparing to launch a Groupon competitor in the first  quarter of 2012, according to Bloomberg. The eBay subsidiary hopes to tap into its base of 103 million accountholders.

From what I’ve seen so far, this doesn’t seem like a credible competitor. The daily deals business doesn’t play to PayPal’s strengths. If it tries to compete with Groupon on Groupon’s terms, it will lose.

Among the challenges:

  1. Daily deals are sold,  not bought. Groupon and LivingSocial have built small armies of salespeople not because they want to, but because they have to. Self serve for small businesses hasn’t worked — even when Groupon has tried it with Groupon Stores and Groupon Now. PayPal would have to build a similar army. Self serve will happen eventually, but not in the next couple of years.
  2. Customer service is not PayPal’s strength. Groupon and LivingSocial have made great customer service (for consumers) a hallmark of their products. PayPal’s reputation with consumers and merchants has a lot of room for improvement.
  3. PayPal has historically been risk averse. Groupon is taking on way too much risk in their business model. But PayPal will likely take on too little risk, making the offer unattractive for both consumers and merchants.

This is not to say that PayPal’s entry won’t hurt Groupon. The biggest area for concern is the pressure that PayPal will put on the revenue share that Groupon gets for deals. This has already dropped dramatically — from 42 percent in 2Q to 37 percent in 3Q.

PayPal (like credit card companies) has built its business on taking small amounts of money from lots of people; Groupon has built its business on taking large amounts of money from few people.

For its payment services, PayPal charges about 3% of the transaction amount. If PayPal offers deals for 10% or even 20%, that will put a lot of pressure on Groupon. That’s especially true for large national, online and retail deals.

One strength that PayPal has is its acquisition of Where earlier this year. Where gives the company a strong mobile team, a mobile ad network and a mobile user base that had 4 million monthly active unique users at the time the acquisition was announced.

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December 13, 2011

Scanning bar codes seems to be a popular holiday pastime

Filed under: local search, mobile, mobile search — Rakesh Agrawal @ 9:53 am

IDC’s 2011 shopper survey shows shockingly high usage of smart phone scanning tools to scan bar codes and QR codes.

Nearly 1/3 of those surveyed said they had scanned a bar code. A common use of this technology is to compare prices when at a retailer. That presents a significant threat to brick-and-mortar retailers like Best Buy, who now have to compete more aggressively with online retailers. This could put a lot of pressure on high-margin items like cables, which cost $80 in store when comparable cables online are $4 or less.

Although more than half hadn’t used the scanning feature, I consider these strong numbers for the technology’s adoption.

There was also high overlap among the scanners: 61% of bar code users have also scanned a QR code; 70% of QR code users have also scanned a bar code.

via Jonathan Gaw

IDC shopper survey

December 11, 2011

Coping with a life-changing disease

Filed under: Uncategorized — Rakesh Agrawal @ 9:18 pm
Contemplating the future at the Fairmont Orchid on the Big Island

Contemplating the future at the Fairmont Orchid on the Big Island

TL;DR: I expect that I’ll be fine. I debated whether to post this, but decided that there was an off-chance that someone might find this information valuable. 

I was diagnosed with diabetes in September.

For someone who has never been admitted to a hospital or regularly taken any sort of medication, the last few months have been quite an adjustment. I’ve been to doctors’ offices more since September than I have the rest of my life. I’ve had to deal with fatigue that on some days made it hard to get out of bed.

My “vacation” to Hawaii earlier this year was spent figuring out how to check my blood sugar daily (the user interface design on medical devices is terrible!) and figuring out the major lifestyle changes I would have to make.

The Hawaiian islands illustrate the circle of life. On the Big Island, lava spews forth creating new land. But with Kauai, you’ve got a dying island with ancient cliffs falling into the ocean. Visitors to the islands also illustrate this. Many come for their honeymoons, where undoubtedly new life is conceived. But many also come to have a last wish fulfilled. (I was reminded of this by a sign at Kona airport advising passengers to remove breathing machines from baggage for separate screening.)

The adjustment has been even harder because I recently moved and don’t know many people in the Bay Area.

I feel old and angry. Old because it’s not a disease that people my age typically get. Angry because I didn’t adjust my habits earlier.

In the grand scheme of things, there are much worse things to have than diabetes. Mine was caught early and with some significant changes, I can lead a mostly normal life.

The biggest changes so far have been in diet and exercise. I’ve forced myself to get used to eating smaller portions and on a more regular basis.

Eating right is a surprisingly difficult thing. Most of the incentives around us are to eat poorly. It’s especially hard when you travel as much as I do. Fortunately, my health insurance covered a diet coach. Even as a well-educated adult, I was surprised at what I didn’t know about nutrition.

Adjusting food and drink is especially hard because there is often a social component to eating. Still, I’ve managed to all but eliminate dessert from my vocabulary. (I made exceptions to split a piece of cake with a friend for her birthday and again for my brother’s birthday.)

I’ve tried to take a scientific approach to the disease. After a night of drinking with friends, I tested my blood sugar and found it off-the-charts high. (Can’t do that again.) In other cases, I’ve been pleasantly surprised that foods that I like and thought I’d have to give up didn’t spike my blood sugar.

As a technologist, I’m impressed by how many companies, especially startups, are focused on helping people live better. It’s a marked contrast with companies like Monsanto and Cargill that profit from obesity.

I’ve been using a Fitbit regularly to make sure I exercise. I’ve set a goal of 10,000 steps a day, with self-imposed penalties if I don’t make it. Sometimes this results in doing silly things like laps of downtown Palo Alto. (It’s 2,373 steps for me to do a walking loop of University Avenue from High to Webster.)

I also have a Withings scale, which tracks weight and body fat.

Both devices take data and make it easily accessible. They cost a lot more than their non-Internet connected counterparts, but I find having the data automatically stored to be well worth it. I’ve even pulled up my Fitbit records at the doctor’s office.

Glooko offers a hardware/software solution for diabetics to keep track of their glucose levels. Withings also offers a blood pressure monitor.

They’re different from traditional medical devices in that they focus on great user experience, are designed with the Internet in mind and relatively affordable. (Though, sadly, not covered by insurance or eligible for various government medical tax breaks.)

Devices like these are the embodiment of improving what you measure. The vast majority of days, I hit my goals.

With changes in diet and exercise, I’ve lost about 10 pounds in the last two months. That feels good.

December 2, 2011

LivingSocial testing new subscription service

Filed under: daily deals, groupon, livingsocial — Rakesh Agrawal @ 8:55 am

LivingSocial is testing a new subscription service called LivingSocial Plus.

LivingSocial Plus, a new subscription service

LivingSocial Plus, a new subscription service

For $20 a month, subscribers will receive $25 in Deal Bucks good on LivingSocial purchases. $5 is good only in that month, the remaining $20 can be carried over for 5 years or longer depending on gift card rules.

The service also offers priority access to deals that expired, subject to availability.

It’s an interesting idea that could lead to steady recurring revenue, which is something Wall Street loves. On the other hand, the people most likely to buy the subscription service would be people who are already big spenders on daily deals. That threatens the margins of the business, which is a concern that has hammered Groupon’s stock since it went public.

As a consumer, I don’t love it. I think the price is too high. Spending $20 to get a $25 store credit seems steep.

After all, LivingSocial and Groupon have trained us to believe that anything below 50% off isn’t a deal.

From the LivingSocial Plus FAQ:

what’s livingsocial plus?
LivingSocial Plus is our new premium membership program and the best way to get the most out of your LivingSocial experience. It’s our little way of sharing the love with our most loyal and adventurous LivingSocial members, month after month.

what do i get?
You get 25 Deal Bucks to spend every month—5 for this month, and 20 for anytime you want (within five years, or longer if required by the laws of your state). You can use your Deal Bucks on all sorts of LivingSocial deal purchases.
You’ll also get exclusive access to selected deals after the clock runs out – just contact us within 48 hours and we’ll do our very best to get another voucher just for you, subject to availability.

what are deal bucks again?
See Deal Bucks FAQ

how do i request a deal after it closes?
Your LivingSocial Plus membership welcome email contains a Priority Waitlist email address, exclusive to LivingSocial Plus members.

how much is it?
$20 per month.

what if i change my mind?
No problem. You can cancel anytime via your LivingSocial account, and your Deal Bucks will remain in your account until they expire.

can i get a refund of my subscription?
You may request a refund if you cancel within five (5) days of subscribing, providing you have not used any of your Program Benefits prior to that time.

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