Specialdeals has a new mission. It is to build a self-expanding online-to-offline (O2O) platform connecting online users and offline businesses without burning money. Burning too much money has been recognized as the common problem of most ecommerce sites and deal sites. Specialdeals believes two reasons contribute to the money burning problem. First is the one buyer to one deal (i.e., one-to-one) type of transaction connection. Second is pre-paying full deal amount before getting the service from the business. These two factors combined create (4) “lacking” in sticky, loyal, social, and viral attributes and (4) “excessive” in money burning, opportunistic customers/merchants/websites, disputes, and customer service. The common wisdom to solve the money burning problem seems to be burning more money.
Specialdeals added the “micro payment” improvement to the one-to-one traction requiring the buyer to pay only a small service (e.g., 5% of the total saving value) to secure the discount first and then pay merchants directly the discounted price. Specialdeals takes no commissions (0%) from the merchants. This micro payment model is different from the traditional coupon model where merchants pay 100% of the coupon production/advertising fees and consumers pay 0% to get the free coupons. It is also different from the Groupon model where consumers pay 100% the deal price upfront and merchants pay 20% or more commissions to deal sites. Specialdeals thinks each model has its own market but believes the micro payment model offers the best value and has the biggest potential.
Specialdeals adopts the micro payment model for four reasons:
- It offers the best brand promise and value proposition for merchants and consumers. Merchants offer the best deals free of charge and get paid 100% directly from their customers. Consumers are guaranteed to find the best deals and enjoy the biggest savings with the smallest micro payments.
- It solves all consumer and merchant related problems found in current deal sites.
- It allows Specialdeals to connect to online virtual currency systems such as facebook credits and iTune credits to connect more online users to offline businesses. This helps online currency find an offline exit. All virtual currency systems require some percentage of “tax” from the apps using the currency. Because the micro payment service fee collected by Specialdeals does not need to be shared with merchants and others, Specialdeals can afford to pay the 30% tax to facebook, for example, and still keep the remaining 70%. This virtual currency connection would not be possible if the traditional deal site’s model of accepting full deal price was adopted since it would be very difficult to get 30% commission from merchants to pay for the virtual currency tax alone.
- It serves as a payment foundation for Specialdeals’ other services.
Besides the one-to-one type of connection, Specialdeals also plans to offer one-to-many type of member service called VIPGaGa to allow its members to pay one membership fee to access all free experience deals, discounted experience deals, and discounted VIP or charge card deals from all merchants. To better serve our VIP members, we plan to recruit only the top merchants who can still (optionally) offer discounts but more importantly agree to honor our new VIP services such as Express Pass Service (without waiting in line to get service), Exclusive Reservation Service (at places normally do not accept reservations), Surprise VIP Gifts, etc. We believe these users will feel proud of our VIPGaGa membership and happy to spread the words and pay the membership fee for not just saving money but more importantly for its prestigious status, VIP privileges, and convenience.
Specialdeals will take one step further to offer many-to-many type of local gathering service to allow its members to effortlessly discover, join, and organize local gatherings. Specialdeals will charge a small fee for the service and encourage its members to download and use its specialized mobile app that facilitates the gatherings. This many-to-many local gathering service will not just provide the money-saving value to its members but also value of meeting friends, sharing interests, and having fun. This multitude of value will motivate Specialdeals members to promote Specialdeals’ website and mobile app, increase their usage, stickiness, loyalty, and create explosive viral growth for Specialdeals without burning money.
By offering one-to-one, one-to-many, and many-to-many types of connections, Specialdeals becomes a complete and self-expanding O2O service platform. It can generate strong and persistent income growth from multiple revenue sources of transaction, subscription, and service. Specialdeals has completed its user survey and data analysis to prove its hypothesis and guide its development. Specialdeals has also recruited hundreds of volunteer beta testers from its user survey. Specialdeals will soon launch the VIPGaGa membership service and will start public testing of its local gathering service in March. Specialdeals’ China operation called “Yikuair” is building the same self-expanding O2O service platform for the China market. Specialdeals is very confident to prove its business model in the coming months and deliver its promise of building a self-expanding O2O platform without burning money.
