Google launched its Groupon-killer, "Offers," in Portland, Oregon, about a month ago.
And now it's gearing up to launch in San Francisco and New York.
Could Offers become a massive new revenue stream for Google--the "second huge growth engine" that Google has long searched for in vain?
Could Google's entry into the deals business clobber Groupon and other deal providers like Living Social?
To begin to answer these questions, we spoke to representatives of merchants who have signed on to offer Google Offers in New York. We also spoke with Google's Eric Rosenblum, the lead engineer on Offers, and Google spokesperson Nate Tyler.
In other words, if Google makes a big commitment to the deals business--a big if--its entry
into the market could hurt the businesses of Groupon, Living Social, et al, even if it does not end up "killing" them
.
The deals business is a "chicken-and-egg" business. To sell coupons (and get a commission), you have to 1) persuade merchants to offer the coupons, and 2) persuade consumers to buy them. Failure on one side of the business means failure overall: You have to succeed on both sides at once.
Google's competitive advantages come on both sides of the deals: The distribution side (consumers who buy the "offers") and the merchant side (merchants who sell products and services through the offers.)