The American online coupon firm is partnering with Deutsche Telekom to unleash physically-based deals. One German startup may already point the way forward.
In many countries around the world, there's long been a culture of people cutting coupons to save money.
For decades it worked by cutting out a coupon and bringing it to a store. But for well over a decade, many coupons have moved online. They've even taken new forms, like bringing a massive short-term deal to a bunch of people at once, as the American websites Woot and Groupon first pioneered online. But now, some companies have now made the leap to smartphones.
Earlier this month in Germany, Groupon and Deutsche Telekom announced that they would be working together to bring new bargains for mobile phone users. While both companies are reluctant to offer up details for now, other German startups may point towards mobile commerce yet to come.
Since September 2011, one Berlin startup, Dealomio, currently offers a smartphone app for use in five German cities, including Cologne and Hannover.
"So if we go by distance and I'm hungry right now, so its time for a late breakfast and I would find this big breakfast costing 7.20 euros ($9.48)," demonstrated Philipp von Röder, one of the company's founders, while on his smartphone, standing in downtown Berlin.
"And then I hit the button - I want that. And the deal is valid for another hour and 41 minutes.
But when he presses the “I want that” button on his screen, he's not actually spending any money.
All Von Röder has to do is go to the café and tell them that he'd like to take advantage of the breakfast offer.
The big difference between Dealomio's setup and the new Groupon-Telekom arrangement, is that with Groupon, the user actually has to buy the voucher first, in order to get the deal.
"You actually have to pay before you go to that store for that voucher and then you can redeem the voucher," explained Florian Resatsch, the CEO of Dealomio.
"But this is quite popular in the US and we see a lot of traction in Japan and in Asian markets for that kind of apps. In Germany I think geo-located e-commerce, it's just about to come in the next year."
Resatsch says that it's still not so convenient for people to pay for things using their mobile phones. Some companies are working on wireless digital wallet options, which would allow customers to pre-load their phones with credit. But, all the e-commerce players, including companies like Dealomio, are hoping to make it even easier to spend money.
"This will also change in the future and if Telekom has actually a way of making people pay with their mobile contract and their phone number, then it's a very easy approach," he told Deutsche Welle.
Theoretically, it's a win-win for everyone. Businesses get new customers, and customers save money. Groupon gets access to millions of customers through Deutsche Telekom. The Financial Times Deutschland newspaper estimated that Telekom will take in over 2 billion euros ($2.6 billion) in revenue by 2015, after having rolled out to several European countries, including Germany.
"We could offer the Groupon app on our handsets that customers get from us so that it's not necessary for customers to download the app, but its more convenient to have it on your phone already," said Priscilla Tomasoa, a spokesperson for Deutsche Telekom, in an interview with Deutsche Welle.
But whether customers choose to use the app, is still up to them. After all, Germany is a country that's remains very worried about privacy and data protection.
"Deutsche Telekom customers always have a choice to either use the services or not," Tomasoa added. "So it's obviously opt-in. We won't push anything to customers that they don't want to."
Still, Deutsche Telekom is being pretty cagey about some of the details of the deal. The company won't say yet where it will be available, which cities, which retailers, which phones, and who is paying who. Indeed, this geo-located mobile-driven commerce is still largely uncharted territory.
"I think it's quite a smart in terms of it allows Groupon to gain access to these kinds of services without having to develop all the technology themselves," said Martin Gill is an e-business analyst at Forrester Research. He said that while he hasn't seen this kind of partnership before, it makes total sense.
Analysts say that compared to other European countries, Germans have been slow to take on smartphones
German market slow to adopt smartphones
Currently no company is offering Europe-wide services, but within each country there are myriad daily deals, offers and voucher sites. If Telekom is successful, it's not hard to imagine that it could rollout this type of system to other countries where the company operates, including Hungary, Macedonia and the Netherlands.
However, Gill added, cracking the German market is going to be hard enough, because patterns of usage varies widely across Europe. For example, he says, in Scandinavia and Italy, people are more likely to use their phones for a range of different applications. But that's not the typical case in Germany, possibly because Germans can be conservative when it comes to switching devices, or an aging population.
"When it comes to using their phones, German shoppers or German consumers really think of their phones as things to talk on," he said. "But they're not that interested in using mobile Internet or using other services."
Author: Cinnamon Nippard, Berlin
Editor: Cyrus Farivar