Monday, 11 February 2013 14:54

Daily Deal Site Half Off Depot Takes over Crowdsavings

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Two US daily deal companies, not exactly in the spotlight thus far are joining forces with Half Off Depot, agreeing to acquire CrowdSavings for $6.4 million in cash and stock. The Two will be rebranded as nCrowd. Crowdsavings alone acquired 15 groupon clones in the past two years and there are two remarkable aspects to this deal, even though nCrowd will still only be a fraction of the size of Groupon or Living Social. .

First is that the two companies represent a total of 19 acquisitions combined, representing a significant percentage of the overall number of deals that have taken place in the U.S.

Second is that this deal was able to get done at all, given the current state of the daily deals industry.

 

Over the past year, Groupon has become a clear winner in the space in the US, despite thousands of startups trying to challenge it. And even at Groupon's scale, it still struggles. So far this year, only one deal has closed in the US (that was for Totsy buying the assets of Mamasource). The last notable deal was when Chase Bank purchased San Francisco-based Bloomspot for $35 million in December.

Even with the acquisition of CrowdSavings by Half Off Depot, the combined entity will still have a tiny footprint. nCrowd will have two million registered users who are signed up to receive daily emails in 17 markets. 

"We compete with Groupon, but we used to compete with 600 daily deals sites. There aren't that many left anymore compared to how it used to be," said Brian Conley, CEO of nCrowd (previously of Half Off Depot).

Conley said the four-year-old company has been able to stay afloat by expanding beyond daily deals to social commerce, which means assisting merchants with running Facebook contests and helping them to improve customer retention. One to two years ago Crowdsavings was on such a buying spree that they included an ad on their website announcing, "We Buy Deal Sites."

Many of the deals were small however, costing around $100,000 to $400,000 apiece.

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