Kelowna group buying site battles bad publicity
Group buying may have been lauded as a pocketbook blessing two years ago, but when Kelowna based company GoSango shuttered its doors last month the whole concept was viewed as more of a curse.
High overhead, overwhelming debt and a slew of bad publicity brought the company to its knees, said its co-owner Michael Minor in an attempt to explain the circumstances.
But consumers and merchants alike found little sympathy as they dealt with the reverberations of bargains-gone-bad and financial loss. Arguments about who owes whom money are ongoing, but while many continue to look for dollars one local business man has found a silver lining.
Bruce Maki is the franchise owner of Kelowna's Smart Betty. It's also a group buying site, but puts its focus on philanthropic endeavours as well as deals.
"Ten per cent of every deal goes back to a local charity as chosen by the buyer," Maki said, noting that there are 20 charities to choose from.
The site has been running since January of this year, but recently made an acquisition they hope will make them more prominent in the marketplace.
GoSango's assets were purchased by SmartBetty in the last few weeks.
"We just bought their subscriber base," he said. "We didn't buy the GoSango name, or corporate entity."
For merchants and consumers that used GoSango, it means little other than the fact that SmartBetty deals will be delivered to their inboxes in lieu of GoSango's.
And while have some have said they're unusual shoes to step into considering the bitter taste left in the mouths of many, Maki sees cause for optimism.
"We realize we have work to do within the community, to build trust but we have a great business model that we're proud of."
Buying GoSango's database has expanded their network significantly, said Maki, noting that they're going to "work hard to make sure consumers get great deals."
Maki also said that Kelowna's group buying experience may have suffered a "hiccup" but the premise is sound, overall.
"The daily deal market in Canada is thriving," he said.
That, in part, is due to a thinning of the herd.
"Around 18 months ago, there were almost 10,000 deal companies in North America, and now there's less than 600," he said. "Of them, Smart Betty is only one moving forward. There's consolidation in the industry, we're moving forward not backward like other deal sites out there."
He also believes the model SmartBetty uses should be more reliable.
Because SmartBetty Kelowna is a franchise, there's a bit of a hands off model, in terms of dealing with cash.
All funds go directly to head office, and they pay out merchants. More specifically, however, is that SmartBetty isn't an upstart, he said.
"We have big corporate backing behind us," he said. "We're part of the world's largest internet marketing company, which has been around since 1995."
He said they've also built their model by watching the mistakes of their national counterparts.
"We cap every deal. We won't sell 1,000 if you can only handle 200, he said.
They're also going to take a "grassroots" approach to building business.
"We'll be getting sign ups by shaking hands … we will go out and tell our story and when people hear our story, they'll understand we're different than the rest.