A new Internet play by Minnesota tech entrepreneur Andrew Atkin is betting that the trend towards group buying is rapidly changing consumers expectations of always getting a deal.
His angle? Previously untapped big-ticket “high touch” verticals. The go-to-market is Groupenture — a virtual destination for travelers to affordably explore their world through reduced-rate group travel deals.
“The early leaders in group commerce have been all about everyday discounts for the masses and what we do is enable the next evolution of high touch social commerce,” he opens the spiel with, describing the opportunity in “broadening a market that is typically reserved for the wealthy.”
Atkin considers Groupenture to be the first instance of a group buying model applied exclusively to the adventure travel space; the site went live last week with over 150 different adventure deals from 100+ tour operators across seven continents. It offers a growing array of adventure experiences, from the Imperial Cities Tour of Morocco to Mountain Biking the Mojave, with new adventures added daily. Users can search upcoming adventures (location, type or month), view detailed itinerary pages, interact with guides, meet others in the group and recruit new travelers to a given offer.
A man with a plan
Groupenture works by initially partnering with the sellers (operators) — those who design, package and manage a given adventure tour — to determine the price points for a tiered threshold in which price is inversely related to the number of participants. Generally, the deeper the discount, the larger the group, with 15-20 participants being on the high end and 1-6 on the low end. He says that the sweet spot for a group size is between 10-15, where discounts range from 15-50% off retail value.
To create awareness and drive transactions, he created the Groupenture Partner Network. This includes branded subdomains, PR and targeted campaigns which cater to affiliate marketers such as blogs, content providers and online communities in the travel, activity, luxury and lifestyle industries. Strategically, he has recruited travel industry vet Richard Weiss to facilitate with operations and otherwise evangelize for Groupenture. “Richards background with Disney Adventures, Mountain Travel Sobek and Backroads Adventure, makes for a great appreciation and understanding of the industry,” says Atkin. “He get’s this.”
Practice and patience
Atkin initially founded parent company UForce back in October 2008 and then spent over a year researching the market and developing relationships. In 2010, he tested the waters with a more general group buying concept that left him believing in the value of social commerce applied in a different context.
From there, he refined the proprietary technology and member acquisition strategy into a turnkey system will enable him to scale the company through other niche verticals. “There are many complex products and services that appeal to a bigger audience through the concept of group buying, but you can’t do this through a general user experience, ” he feels.
The primary revenue source is commission driven, although he see’s plenty of room to generate through targeted ads, affiliate sales, cross-promotions, etc. .
Begin with the end in mind
No question that the group buying craze has become inflated beyond belief and hyper-competitive to the point of diminishing returns. Even before Google’s reported $5-6b offer for Chicago’s Groupon (which would mark Google largest acquisition since the 2007 $3.1b purchase of DoubleClick), innumerable copycats set out to get a piece of the action. Short of diving into the mechanics here, I’m as skeptical as the next person about the sustainability of it all.
If the Groupons of the world have hit the nerve that’s fundamentally changing consumer behavior patterns by making commerce more social than ever and simultaneously raising people’s expectations of always getting a deal — then Uforce may be on to something here — provided they can become attractive enough, quick enough. Even if Groupenture is the first of it’s kind in this space, rest assured there will be imitation.
But the ‘everything to everyone’ generalists can only get so wide before a contraction opens the market for specialists — hence Groupenture’s competitive advantage. In the end, whether it be Groupenture or another, will any marketplace remain unexploited? Automotive, real estate, consumer/household electronics, the list goes on.
Atkin’s previous tech experience includes Co-founding (20o0) and selling (2007) venture-backed ClickIQ, an online market research platform for large consumer companies like Best Buy. Backed by his team of advisors, he’s convinced that previously untapped high margin verticals like adventure travel are ripe and ready for the taking.
“I’m interested in building a great company around empowering people…one that is valuable to everyone involved. Once we begin to own these niche markets, there will undoubtedly be a bigger fish with an interest in such a captive audience…or all of them collectively. We would never turn down help and I would love to talk with local investors — provided they understand we’re not a med-tech company,” says Atkin.