BuyWithMe’s Plan to Advance

With Groupon’s explosive growth, other local group discount sites have a tough road ahead in claiming a solid second place. Claiming the top spot? Considering Groupon’s massive amount of funding from the same people who’ve invested in Facebook, a significant challenge to say the least. Armed with a new CEO, Buy With Me is ready to take on that challenge.

Launched 10 months ago, BuyWithMe already sees 110,000 visitors per month (according to Google Ad Planner) which is impressive for a site that’s been around for less than 10 months. Impressive until you find out that 18-month old Groupon receives 5.1 million. How do you grow a website in a market where the leader has an 8-month head start, deep pockets and first mover’s advantage?

“Our purpose is supporting the local communities we’re in,” says CEO Cheryl Rosner. Throughout our conversation Rosner, a former president of Expedia and Hotels.com, emphasizes the focus on creating value for merchants and buyers. “Our position is consistent. It’s to know our consumers well, to create local experts. What we find is that since we have such a strong reputation, the type of consumer we deliver has encouraged a lot of merchants to work with us.”

But when another site is around the corner, able to offer an even larger flood of shoppers, is that enough to give BuyWithMe a competitive advantage for unique offerings? For Jamie Ahn, owner of Manhattan’s Townhouse Spa, it is.

“From what I’ve seen, the quality of their clients is similar to our existing clientele. There’s a lot of crossover, which is a good reflection. We want people who return, not just people looking for discounts,” says Ahn, who was also approached by Groupon but decided to go with BuyWithMe instead.

A quick search turns up a review on Yelp that shows that it’s a position that works for consumers as well.

“Went there tonight after buying a package at http://www.buywithme.com… After a long week of work this was an absolute treat!! I plan to go back!” – Pedro M. via Yelp

The smaller, targeted audience that BuyWithMe offers was actually an advantage for Ahn. “That short term gratification (of a high volume sale) can kick you in the butt depending on what business you’re in. Another spa sold 3000 massages on groupon, but most people will book during peak hours like all other clients. So you’re going to lose out on existing clients in the long run.

You get that amount in one check right away, but you don’t want clients feeling like they’re 2nd tier either and complaining to both establishments. We did a lot of research and looked at our capacity, looked at the model with other businesses they had. It was high enough that we didn’t have 1000 people we didn’t want, but the clients who purchased the deal would get the same service we usually provide. We don’t want to compromise on quality and BuyWithMe worked with us on adding value rather than cutting the price down to a level that we couldn’t sustain long term.”

Indeed, one of the frequent comments on articles discussing Groupon focus on the sustainability of the model for the merchants offering the deals. For small businesses who don’t have multiple locations or the staff levels to handle a sudden influx of thousands of new customers, BuyWithMe’s smaller size could prove advantageous when targeting local partners. For shoppers, knowing that there won’t be a backlog of appointments or reservations could easily make the offerings on a smaller site appealing.

“We currently work with partners in different markets,” says Rosner. “In San Diego we work with the local ABC affiliate, in Boston we work closely with Boston.com and have since founder Andrew Moss started the business. We’ve found that’s a very valuable and good way for us to enter a local market.” By year’s end, BuyWithMe has plans to expand from 4 cities (Boston, New York, San Diego and Washington, DC) to 20.

While they are likely markets that their larger competitor already exists in, a focus on local partnerships and more manageable responses for small businesses could easily leave room for multiple local deal sites to successfully co-exist. In fact, as the number of local deal sites continue to grow, the stiffest competition may come from a site like Gilt City rather than Groupon. Rosner’s had success in establishing sites in the very crowded, very competitive travel market before though, so don’t discount Buy With Me just yet.