Google Offers Holding Its Own Against Groupon in Portland

Google may have a shot at entering the daily deals market despite being very, very late to it.

After Groupon turned down Google’s $6 billion offer, the online search giant boldly decided to start from scratch and build its own service.

Now, after 22 days in the Portland, Ore., market, it looks like it may have a chance — especially after yesterday.

Google offered $10 for $20 at Powell’s Books, which is one of the most iconic bookstores in the Pacific Northwest.

Within 24 hours, it sold 5,000 offers — by far its biggest day.

The Powell’s offer also represents the third time that one of its deals has sold out. The bookstore offer was capped at 5,000 and an arcade maxed out at 750. An offer for a restaurant also sold out.

Otherwise, Google’s performance has matched the relative value of the offers.

A dentist here, a cup of coffee or a haircut there, resulted in dozens to hundreds of sales, but nothing outstanding. Only one other offer sold more than 1,000, and that was for $20 worth of food and drinks at a bar for only $7.

In fact, today’s offer has the opportunity to be the worst performing of all, falling off a cliff from yesterday’s banner performance to only six deals by 1 pm.

While there are some signs Google could be performing decently, it’s difficult to compare to either pre-IPO Groupon, or its next closest example, LivingSocial.

For one, the scale is completely different.

Google is live in only one market; Groupon is in 175 — and that’s just in North America.

Google has sold at least 8,473 total deals in the 12 deals it displays; Groupon has sold 28 million in the first three months of the year.

It’s particularly hard to calculate in Portland. Google lists a dozen of its offers and how many it sold on one page, making it very simple to see how its performed over time.

Groupon does not do that and a spokesperson declined to share that information with me.

However, the data is still readily available on the Web if you can find it. For instance, on June 19, Groupon sold 187 deals for dance lessons. A day earlier, Google sold 209 mens’ haircuts. On June 14, Groupon sold 413 teeth whitening deals. On the same day, Google sold 750 deals to an arcade.

Even with those numbers, it’s difficult to draw any conclusions since Groupon sometimes offers more than one a day and sells deals through third parties that would not register on the site.

While the data set is extremely limited, at least initially, it appears that Google’s experiment has not failed — it continues to increases both sales and the quality of offers over time.

But it will be a while yet before we see the entire impact of Google’s offering. Much of Google’s volume will ultimately be initiated from the phone, not the Web.

At the D conference in May, Google’s Executive Chairman Eric Schmidt and VP of Commerce Stephanie Tilenius demonstrated on stage how Google Offers will be used in conjunction with Google Wallet, the mobile payments service it is building for Android.

Rather than charging merchants to use the Wallet, Google will make money from a plethora of well-targeted offers inside.

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I think the NSA has a job to do and we need the NSA. But as (physicist) Robert Oppenheimer said, “When you see something that is technically sweet, you go ahead and do it and argue about what to do about it only after you’ve had your technical success. That is the way it was with the atomic bomb.”

— Phil Zimmerman, PGP inventor and Silent Circle co-founder, in an interview with Om Malik