NC-based Twongo holds its own competing with Groupon, Living Social

March 8th, 2011

By Allan Maurer

CARY, NC –Twongo, a social savings platform started in the Triangle in January 2010 offers 50 to 70 percent off local deals much like the ones sold by the 800-pound gorillas in the space, Chicago-based Groupon and DC’s Living Social. While it is currently only in a handful of North Carolina and Canadian markets, it is already profitable and plans to expand to 15 more markets in the next 12 months.

The company helped residents of the Triangle area save more than $1 million on retail goods and services last year.

Some of 2010’s deals included discounts for as much as 70 percent off at local restaurants such as Jimmy V’s Steakhouse, 42nd Street Oyster Bar, Daniel’s on 55, Danny’s BarBQ, Peak City Grill and The Meat House .

The company also offered savings opportunities on services from businesses such as Aviator Brewing Company, Aveda Institute, Garden Supply Company, BodyLase Skin Spa, RightTime KiDS, Raleighwood Cinema Grill, White Oak Landscaping & Irrigation, Carolina Auto Spa, Rush Hour Karting and Triangle Segway Tours.

How did Canada get into the mix?

Founder and CEO Brad Halferty tells us the bootstrapped company will seek funding to fuel accelerated growth. Like its large rivals, Twongo wants feet on the ground in each new market it develops, so the 17-employee company will be doing its small part in reducing unemployment.

Currently Twongo operates in Raleigh, Cary, Apex, Wilmington and four British Columbia markets. How did Canada get into that early mix?

“An investor there, Mike Minor, a former IBMer, was interested in the space and loved Twongo, so we licensed rights and they’re doing great,” says Halferty.

The company’s name derives from the Chinese concept of “tuangou”, or group buying.

The local deals group buying space is one of the hottest in the digital arena, with Groupon collecting $950 million in its most recent venture round and DC’s Living Social landing more than $230 million, including $175 million from Amazon.

“I monitor what they do, but I don’t obsess over them,” says Halferty. He notes there are new entries in the space monthly. Some estimates say more than 120 such firms are in business, most limited to only one or a few markets. Google, which tried unsuccessfully to buy Groupon, launched its own version and even the New York Times is getting into the act.

Consolidation, attrition expected

“I think in the next six months you’ll see a lot of consolidation and attrition,” Halferty says.

As for Twongo, he says he has ideas for expanding it into areas the other companies in the space have not yet tried, but would only discuss them off the record. Currently, it targets much the same types of businesses the others do, those with extra capacity and the ability to handle an influx of traffic without breaking the system, such as restaurants, spas and so forth.

One of the ways he says Twongo differentiates itself now is that it does not seek just any customer for its deals. “We don’t want everyone. We want the right customer with the most disposable income who will spend over and above the voucher and return to the business if they like it.”

So far Twongo’s strongest marketing has been word of mouth, although it does some online and radio marketing as well.

Halferty sees mobile as the driver for group buying deals in the future. “I think we’ll see a huge migration to mobile. The ability to get on demand deals will be huge and go hand in hand with electronic wallets. I think it will shake out the one trick ponies, the daily deal firms that are underfunded or not yet established.

Halferty says Twongo has already had numerous clients run repeat deals. “We work with closely with each client,” he says.

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