Entrepreneur returns to NZ to start one-day deals online

STARTUP

When Daniel Taiaroa arrived back in New Zealand fresh from two years studying in the United States, there were no websites in this country offering one-day deals.

Now however, not only do more than 40 New Zealand sites offer one-day deals, there are even sites aggregating all the one- day deal sites, and Kiwis seem to have taken to the concept with all the gusto of sharks scenting blood in the water.

Some sites cover specific sectors like wine; others cover specific locations, like LTD.co.nz which is Dunedin only. They range from the big guys like 1-day, owned by Torpedo7 founder and e-tail entrepreneur Luke Howard- Willis, to one-man bands like Mr Taiaroa who recently launched a website called Deal Eater in Wellington with plans to expand into Christchurch and possibly Auckland.

Deal Eater offers one-day deals around cinemas, bars, restaurants, cafes, pizza merchants and an optician. An optician? "I wear glasses and know how expensive it is," says Mr Taiaroa.

The concept involves a deal offered over a specific time, usually 24 hours (many of the websites have a digital clock running, usually somewhere along the top). If enough people sign up for the deal in that time, it becomes available to all of them. If the deal doesn't get a required number of people signing up, it doesn't happen. The website owner takes a cut of the deal from retailers who can offer the deals as cheap advertising or quantity discounts, which is essentially the same thing.

"It's a marketing solution that offers a unique form of advertising. It's directly measurable, there are no upfront costs for the companies, and it's risk-free. If not enough people purchase a deal, the deal is off and the company gets marketed for free to our mailing list of more than 5000 subscribers."

Is Mr Taiaroa daunted by the burgeoning competition? No way, he says. But then he's 28 and Deal Eater is his first start-up after graduating from Canterbury University with a commerce degree, followed by a Certificate of International Trade from the University of Washington. And it hasn't cost him much. He developed the website from scratch and says his days have been spent "pounding the pavements to find good deals". It's all about building a good reputation for deals and a good database to contact via email, Facebook and Twitter, he says. He pursued the time-honoured path of friends and family first and the ripples spread from there.

He saw the concept of one-day sale websites hit the jackpot in the US, where Groupon launched in late 2008 in Chicago, quickly spread throughout the US with its websites and raised US$135 million earlier this year from Digital Sky Technologies, a Russian investment firm.

"I saw Groupon taking over the world and liked the business model because of its simplicity. It's about using social media and internet to open up a larger market place. It's a community thing; it's all about the group and spreading the word."

Mark Revington is the editor of Unlimited magazine. Next week a business mentor casts an eye over the company.

- © Fairfax NZ News