LocalGinger spices up online deals
On Monday the featured package included 10 car washes in Salem for 50 percent off. There were facials and skin-toning treatments for $75 instead of $200 on Wednesday. Friday’s offer was $75 worth of wine, lobster, and Kobe beef for $27.
That’s a typical week of deals for the Newburyport startup company LocalGinger.
What’s not so typical is the business itself, which combines social media and advertising to offer discounts to the public.
Companies like Groupon and the Boston-based BuyWithMe were the first large-scale businesses to pioneer the concept of coordinating with a retailer, restaurant, or other business to offer goods at a deep discount. A certain number of people must buy the coupon for the deal to be valid. Usually deals only last 24 to 48 hours.
There are more than 70 group buying compa nies in the national market, most of which target their deals in major cities, according to the website Business Insider. This is where LocalGinger bucks the trend. Focusing exclusively on businesses on the North Shore, LocalGinger is mining a niche that many larger companies have yet to explore.
“Groupon and Living Social are the two 800-pound gorillas in the social business world. They’re focused on the 50 large cities in the US,’’ said Arik Keller, cofounder and chief executive of LocalGinger. “We live up here in Newburyport, so we wanted to create deals deeper into the North Shore.’’
Although their company might not be as far-reaching as some, Keller said LocalGinger, which launched in February, has been making a profit since day one.
LocalGinger works with businesses to create a bargain on their services, and set a minimum number of coupons that must be sold. The company, which currently has five full-time employees, then sends the deal out in an e-mail to everyone who has signed up to receive the discounts.
Ann Ormond, president of the Newburyport Chamber of Commerce, said she is excited by LocalGinger’s contribution to local businesses, and noted that the company recently won Salem State College’s sixth annual North of Boston Business Plan Competition, beating out 21 other companies for the top prize.
“I think it’s a win-win for everybody, because you can buy something online and then go into someone’s store,’’ she said. “It’s not like most buying or shopping online where you buy online and you don’t go into the store.’’
Many business owners who have participated said their deals have helped them find new customers.
“I was able to pick up 44 new clients,’’ said Amanda Mullholland, owner of the exercise studio A to Z Method in Newburyport.
Mullholland said she was worried the results wouldn’t be worth the discount she offered.
“I was kind of petrified to get the names of the people who bought the deal, because if these were regulars, I had backfired. So when I got the list, it was great to see that only 15 were regulars. It was a big sigh of relief for me.’’
Cheryl Fisher-Schwind, who has worked in massage therapy for 16 years, said she also had reservations about the process when LocalGinger approached her to advertise a deal.
“It was kind of painful initially thinking of discounting my services so deeply,’’ she said. “But I thought, ‘what the heck.’’’
Fisher-Schwind’s deal sold approximately 100 coupons, the majority of which went to people she has never met before, which surprised the masseuse.
“It’s funny to me that none of my regulars, well, only a small handful, knew about [the deal].’’
Fisher-Schwind said she has already scheduled a time later in the year to run another coupon deal.
Yet while she expressed appreciation for LocalGinger’s focus on local small businesses, she also raised concerns about the sustainability of such a model.
“There are things that are unique to the North Shore that these guys can promote. Through their deals I’ve learned about a couple places I didn’t know about,’’ she said. “But you wonder, at some point are they going to run out of cool things to do?’’
Though confident in the breadth of business selection the North Shore has to offer, the company has anticipated concerns that consumers will lose interest if LocalGinger continues to showcase the same kind of deal.
In development right now is a LocalGinger application for iPhones that will let people vote on whether or not they like a deal.
“People are glued to everything through their smartphones, so we thought, ‘let’s let them vote,’ ’’ Keller said. “So if people don’t drink wine and they’re getting an ad for a wine tasting, they can vote on it.’’
Keller and cofounder and chief technology officer Paul Parisi said the application should be available within a month.
LocalGinger is also expanding to sites beyond the North Shore; they have deals already set up in Naperville, Ill., and soon will be bringing their local expertise to areas of Connecticut and Virginia.
The goal of everything their company is doing, Parisi said, is to allow local businesses to thrive, even in a difficult economy.
“For consumers, times are tough, and this is a great way to nudge them to go either do new things or go back and go to businesses they haven’t frequented in a year or two. It’s exactly what they both needed.’’