Ukraine. Just Unforgettable

Ukrainian design now is in a rather unstable state and evokes mixed judgments. Many specialists suppose that one of the problems of the professional Ukrainian design is a brake between “old” and “new” specialists. While new techniques and instruments have being come into service, most young people have to master themselves because instructors of the “old guard” are not always familiar with these techniques. In reference to quality design, the competition level there is quite low, a lack of understanding of design significance being terrific.

So if you have an interest in the graphic design you are welcome to read full article

Industry experts believe that that the deal value is at least not less than $289K (the sum, which Scoopon founders brothers Hezi and Gabby Liebovich asked).

Despite of the deal groupon.com.au domain still leads nowhere at this moment. It’s be interesting to see how fast Groupon will change branding of it’s Aussie venture currently called StarDeals to Groupon.

Author of one of most popular web servers for high load websites, nginx, Igor Sysoev wrote yesterday at his website that he is creating a company to foster nginx development.

According last Netcraft survey nginx is used for over 7% of million busiest sites

Up to date Igor Sysoev has been working in big Russian Internet company Rambler.Ru and nginx was developed as an open-source project while used for Rambler as well.

It’s promised in Ihor’s post that new company will keep nginx open-source.

For now it is unclear will Sysoev combine this new business with employment in Rambler and what will be a revenue model for new company.

Alex told about Altima’s approach to business, proudest moments in the life, business secrets and more. Link to the interview: http://www.flyingsolo.com.au/spotlight/alex-levashov-altima-interactive

Recent research conducted by Professor Utpal M. Dholakia from Rice University contains facts that are not very pleasant form currently booming group buying industry:

• just a bit more than half (55.5%) of businesses recorded a profit after group buying promotion, more than quarter (26.5%)  made losses and the rest broke even
• less than half of businesses that ran group buying promotion are going to do it in the future;
• almost 3/4 of merchants have no loyalty to group deal provider and ready to switch

So the conclusion that the researchers made is not very positive for group buying industry especially for websites that provide deals: the little loyalty, low rate of interest to repeat purchase from merchants and increasing competition will lead to the erosion of the current healthy margin and make the life of group deals providers harder.

The research collected data from 324 US businesses operating in 23 markets that used group buying promotion in 2009-2011.

Other interesting findings from the research:

• over 80% of deal users were new customers, however just around 20% were converted to repeat customers and 36% spent beyond deal’s face values;
• to make the deal profitable merchants should use higher face value, lower discount, limit the maximum number of deals and list shorter redemption period. In addition appeared that item based deals are more profitable than ‘dollar’ based deals;
• daily deals worked best for health and services and special events industries (over 70% of merchants reported profit). Two most popular categories of businesses – restaurants and spas experienced much lower success rate (43.6% and 53.7%) and only 53.7% of spas and 41.5% of restaurants are going to use daily deals in the future;
• businesses used 23.5% of their marketing budget for group buying promotions at expenses of more traditional media such as Yellow pages, print and direct mail

If you are working in the group buying industry or considering to run daily deal campaign it’s highly recommended to read the full research, it’s available at Professor Dholakia web page: http://www.ruf.rice.edu/~dholakia/

According press-release, Magento will be used to build new product from eBay, X-commerce:

X.Commerce, eBay’s newly created integrated open commerce platform group, is focused on leveraging the company’s assets and partner technologies to build a strong, robust developer community as a resource for merchants and retailers of all sizes

It’s interesting to track how the situation will develop and what happen with Magento open-source solution. It would be pity if eBay decides to shut it down.

There are some interesting financial data about the company performance till 1st quarter (ended March 31) of 2011. I put the most important numbers in the table below (all numbers are in thousands):

Another extremely important piece of data is that Groupon’s cash remaining at March 31, 2011 is $209M.

So, if the current trend of losses continues, the company will burn all the cash in 3rd quarter of 2011.

As Jennier Van Grove wrote in Mashable appeared that most financing from previous rounds (series F and G) was cashed by founders and early investors, only $151.4 million went to company. CEO Andrew Mason cashed almost $28 million, co-founder Eric Lefkofsky sold shares on $382 million. So now Groupon goes public and asking for more money to finance it’s growth.

There are also some operational information:

(1) Reflects the total number of subscribers on the last day of the applicable period.

(2) Reflects the total number of unique customers that have purchased Groupons from January 1, 2009 through the last day of the applicable period.

(3) Reflects the total number of merchants featured in the applicable period.

(4) Reflects the total number of Groupons sold in the applicable period.

For more information you can check SEC web site and read the S-1 form

Regarding operational data it’s interesting that one of Australian group buying leader, Scoopon has just announced that they sold 1,000,000 coupons and reportedly has around 500,000 subscribers.

However competitors, namely Cudo, doubt that this statistic reflects the reality and Hitwise data has several major flaws: limited coverage (no Telstra and Optus for example), traffic is measured at providers (not users) so it is easier to use bots and tricky ads to inflate the statistic.

In my personal opinion these doubts look reasonable.

GMT is a start-up business from Texas that sells ready-to-cook food sets online. After couple months of operation GMT launched Groupon promotion and share with researchers all the data from their accounting system to analyze the effect of group buying promotion to GMT business.

Key fundings:

1. Groupon promotion definitely boosted the revenue;
2. The overall profit was not affected significantly before the end of promotion, taking in account coupons that were not used the effects is positive;
3. The margin dropped during the promotion;
4. Peak loads with most active redemption of coupons were the start and the end of promotion time, heavier at the end, just before coupons expired;
5. Group buying customers are especially useful for start-ups, since help to test the business model and provide valuable real feedback

Full report is available at Dr. Holakia’s page: http://www.ruf.rice.edu/~dholakia/

Scoopon is the last from three leading group buying web sites in Australia that was acquired or got external funding. Two others are Spreets (now part of Yahoo!7 and JumpOnIt – was purchased by LivingSocial).