Quick Pitch: Stampede.it runs group deals for digital goods.
Genius Idea: Targeting businesses with low marginal costs.
The amount of money consumers spend on products that only exist in a digital sense is increasing -- the number of ebooks sold on Amazon recently surpassed the number of physical books, and some estimates predict that branded virtual goods alone will reach an annual revenue of $318 million by 2015.
Mainstream sites like Groupon have not excluded such products from their offerings. But since just about every niche product category has sprouted its own group buying site, it seems fitting that digital apps, games, services and content get a site of their own.
Stampede.it is the first digital-products-focused group buying site we've noticed step up to the plate. The site, which launches today, plans to offer one deal every 2-3 days using what it calls a tipping point system. The first deal -- $20 of credit for a casual game tournament site called SkillAddiction.com -- costs $15 if at least 15 people buy the deal, $10 if at least 50 buy it and $10 if at least 100 people buy it.
These tipping points incentivize consumers to share and promote the deals they buy. Similar mechanisms have worked well for Livingsocial, which gives users a free deal if three of their friends buy a deal, and Groupon, which gives users $10 in credit for referring a new user.
Digital products are a good target for group buying because they typically have low marginal costs. "The company spends the same amount whether one person or 1,000 people download the game," explains CEO Justin Groden.
Not so with a business like a restaurant, which has to buy supplies for 100 discounted meals if it sells 100 deals for them. In this way, a group deal might be less risky for a company that produces a digital product. These companies, however, won't be jumping to offer deals until Stampede.it proves it can provide interested customers.
Groden mentioned features ranging from badges to referral rewards that might help grow a user base, but at day one of operation, it's too soon whether to tell if the process of acquiring users will be the hurdle that crashes or lifts the startup.
Image courtesy of iStockphoto, mattjeacock
Series Supported by Microsoft BizSpark
