'Anti-Groupon' Sites Offer Daily-Deal Alternatives

With online-coupon site Groupon hitting hard times, hundreds of startups are clamoring for the attention of small businesses with options that the vendors claim are more cost effective.

Two of those companies are New York-based Signpost and San Mateo, Calif.-based Mobile Spinach.

Both companies are trying to exploit the criticism Groupon is getting from many small businesses that say they have lost money by offering discounts through the site. That's because Groupon takes a hefty cut of the revenue generated, and businesses also find that Groupon fans tend to be bargain seekers who seldom return and pay full price for products and services.

The latter scenario is particularly hard on restaurants, which are typically low-margin businesses.

Different Approaches to the Daily-Deal Game

Signpost and Mobile Spinach take different approaches than Groupon and claim to offer more value. Signpost gets discounts in front of potential customers mostly through email and other deal sites, while Mobile Spinach uses an app on an iPhone or Android smartphone. Both companies give businesses the ability to set the terms for their own deals, making it more likely customers can at least break even.

Roughly 90 percent of Mobile Spinach's customers are restaurants, with the remainder consisting mostly of clothing retailers and businesses promoting events. Restaurants dominate because the mobile app is best suited for them.

People looking for a sandwich shop at lunchtime can search for a business, with the app displaying the discount options near their location using the phone's GPS capabilities. After saving the coupons they want, people can head to the restaurant, order a sandwiches and then show the food server the electronic coupon on their mobile phone.

This can be done anytime, since the coupons do not have an expiration date. However, most searchers redeem the coupons soon after finding them, according to John Vitti, co-founder and chief marketing officer for Mobile Spinach.

Every coupon has a big "redeem" button that an eatery's employee presses. This credits the merchant's PayPal account with whatever the customer paid for the discount, minus Mobile Spinach's cut, which averages 20 percent. If the deal, for example, involves paying $5 for $10 worth of merchandise, then the business would get $4.

Mobile Spinach provides online analytics, so businesses can see what customers purchased, when they bought it, and how much they paid. Trends become apparent over time, and Mobile Spinach works with customers to fine-tune promotions based on this feedback.

The company works with 5,000 merchants in 611 cities and sells between 200 and 500 deals a week, Vitti said. The company is profitable, and its main backer is Blumberg Capital.

Signpost distributes its customers' coupons through 1,200 bloggers; social networks, such as Facebook, Twitter and Google Plus; and deal sites, including HasOffers, The DealMap, Dealery, Yipit, and 8coupons. Roughly 90 percent of the Signpost deals are seen through email or a deal site, with the remainder on mobile apps, according to Stuart Wall, co-founder and chief executive.

Signpost charges a flat rate of $99 a month, which includes working with customers to create a promotional campaign. While Signpost's fee is fixed, the sites distributing its customers' deals often take a percentage of sales. Partner Saveology, for example, takes a 15 percent cut.

So as Groupon works through criticism from merchants unhappy with poor returns, small businesses have the option of trying the services of plenty of rivals -- and their numbers are likely to keep growing.