Loopt Backs Into Local Deals

The title of this post is meant to convey Loopt’s longstanding presence in mobile local, as well as the “reverse” nature of the deals product it launched today with ChompOn.

Known as U-Deals, it’s a sort of reverse group buying that crowd sources deal interest from its user base. Once deals reach a critical mass, Loopt presents the offer to merchants. This has a certain appeal in its ready-made aggregated user demand and lack of merchant risk.

As the deals space continues to develop, so do the various structures, formats and economics around deals products (especially in mobile). As we’ve argued, evolution as we enter deals “second act” attempts to alleviate some of the challenges faced in the first act.

One of those is the cost of reaching and satisfying merchants (i.e., Groupon’s 4000 sales reps). Along these lines, one thing U-Deals does is limit the need for sales by consolidating existing deal demand, while also making the deal even sweeter for the average merchant.

To the last point, it’s essentially a check ready to be written with the only requirement of fulfilling the offer. Again, less risk. Some challenges I see include originating deal terms from users rather than merchants (attainable merchant terms have been one conflict with Groupon).

The other challenge will be one of self selection. In other words, the deals that will rise to the top of Loopt user demand will likely be the businesses that have the least need to sacrifice margin for consumer acquisition. But to some extent, such is the way with all group buying.

Still, we applaud Loopt for an interesting twist on group buying/deals and see many advantages in this model. As we’ve written, there’s opportunity in sourcing demand from users as a starting point for local deals. We’ll hear more from Loopt during next month’s Deals 3D conference.

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