The appeal of deals was initially their role in discovering new merchants and services, right? But as aggregators and others started entering the deals space, there have been more elements of “shopping,” where people would find the best discounts among merchants in a category (i.e., nail salons, massage, etc.).
Now, we’re seeing the introduction of consumer driven deals. This model, with shades of Priceline in it, lets consumers tell merchants that they want a deal — and even, in some cases, how much of a discount they want.
Now, add SoBiz10 to the list. The Denver-based start-up is in a private beta in Denver and Lawrence, Kansas, and is eyeing additional markets around the U.S.
Its core concept isn’t so different from what Andrew Mason and his friends at The Point were doing before it evolved into Groupon: Get 10 friends together to pitch a deal to selected merchants, or merchants within categories. Prices must be over $5. Merchants have 48 hours to say yes, and offers expire after 30 days.
SoBiz10’s software provides advice to users as they try to win merchant approval for the deal. If they are seeking a big discount, for instance, the software advises them to get more friends for a better chance at success. Once merchants are enabled for deals, the deal can be repeated or new deals can be easily implemented. For its effort, SoBiz10 grabs 25 percent as a commission — at least 5 percent less than low-end commission for most deal sites.
A side effect of the pitch process is that SoBiz10 is developing a non-comprehensive merchant directory based on the pitches. Social media services run by the company also enter it.
Am I a big believer in consumer driven deals? Not really. I don’t think that most merchants/restaurants/services want consumers to target them for self-prescribed discounts. How many of these customers are going to be new?
But in the end, certain, price-elastic categories might work well. A lot of it depends on human psychology. I know I am always amazed when I go to theater “pay what you want” previews: People typically pay close to the going rate.