Business model to hit the market
Groupon is considered a web phenomenon and a household name for collective discount services and unprecedented (even for ecommerce startups) growth rates. The startup got the breaks in the credit markets free-fall when an increase of client base was a tickler. The business model was found to be extremely appealing for customers and surprisingly scalable. It combined the social idea of providing a way to help local businesses with cash flow and sales generation when banks were not lending, let people in local communities find interesting things to do in their city, and a practical goal to secure profits. Founders didn’t want to sell overstock gadgets or deal with shipping and returns—and focused on services.
While pushing hard for growth, Groupon won one US state market after another, soon expanded outside the United States, and settled in dozens of countries. The main strategy of grabbing the international market was to buy already successful local discount services. It enabled fast-track and higher integration pace in a competitive battle. The most successful projects helped avoid waste of time in trying to guess the local consumers’ preferences.
Berries of Darberry
Groupon Russia started in 2010 as Darberry, a discount service for products. Back then, similar services popped up all over, but Darberry had some advantages.
First, it started earlier than others and at the right moment—the Christmas shopping period. In a week after the launch, there were over 100 daily orders. In two weeks, the total turnover reached $17K and the margin turned out to be two times higher than expected. These numbers kept growing, so the founders started to envisage the project’s evolution. They researched the US market and met Groupon, focused on the service coupons sector—with no logistics, warehouses, couriers, and returned items problems but with the higher 50% margin.
Darberry adopted that approach to build a profitable and dynamic business. That idea took off: a couple of months later, the project worked in seven cities and reached up to $250,000 in monthly turnover.
Second, Darberry stood to build a legal business from scratch, with transparent processes available for any audits. Third, Darberry adopted the aggressive marketing strategy. Finally, they had a strong and tech-savvy platform built together with Martians (when Groupon evaluated Russian coupon platforms for acquisition, they named Darberry’s tech among the best).
In August 2010, Groupon Inc. acquired Darberry, renamed it, and rebranded it as Groupon Russia. The corporation’s target was to cover all large regions, including the largest European geographies like Russia. They chose this acquisition among over 30 similar projects: some had investments from professional players or a large audience. But Darberry won with the skilled team, business transparency, and the platform that could support rapid scaling.