Stephen Foley: Foursquare is in a better position to net profits from local commerce


US Outlook: Groupon says it is "better positioned than any company in history to reshape local commerce". No it's not. Foursquare is.

Things move so fast in the world of internet start-up hype that you might already have forgotten about Foursquare. This is the company, launched two years ago, that allows you to "check in" when you are at a bar/restaurant/party/museum/whatever, so that your friends can see where you are.

While Groupon and others have been snaffling the headlines, Foursquare has been growing like topsy. It had 6 million users in January, 8 million in March, and is now approaching 10 million. In its earliest days here in New York, where it was founded, bar managers and café owners spotted the potential of Foursquare, offering free beer or coffee to the person who became "mayor" by visiting their business and checking in most often.

"Geolocation" services like Foursquare open up the possibility that local merchants can target ads or offer special deals to potential customers as they pass by. This will be the revolution in local commerce. But geolocation has been hampered by privacy issues, and many of Foursquare's rivals have obstacles to overcome. Apple and Google have faced a backlash for tracking people through their phones without their knowing. Facebook and Twitter are desperately trying to persuade you to hand over details of your whereabouts, so far without much success. Groupon bases most of its "targeted" mailings just on your residential postcode.

Foursquare is the one major business whose foundation is users openly and enthusiastically sharing their location. With a new feature, Foursquare Explore, it now recommends nearby places you may want to visit, based on your check-in history and the recommendations of your friends. This is the opening for local businesses that want to reach Foursquare users, and one day it really could reshape local commerce.

Until now, Foursquare has been disappointingly passive in its work with local merchants, hanging back and letting business owners work out the opportunities for themselves. Little wonder, since it is expensive to build up a network of local business development or sales people (take a look at Groupon's flotation prospectus to calculate how expensive). It needs to hurry up, as Groupon is getting more heavily into geolocation.

But Foursquare has started to be much more proactive, creating tools for merchants to examine some of the data about check-ins at their business. The company is said to be close to tying up another round of funding which could be used to scale up some of this business outreach.

Foursquare doesn't yet have the critical mass of users, it hasn't found the scalable, repeatable business opportunity for local merchants, and its management is unproven, but this is all trumped, I think, by one important difference. Groupon and the other email coupon companies take a cut of up to 50 per cent of revenues on special offers by local merchants, which seems a bit steep for an experiment in marketing. With Foursquare, merchants pay nothing to set themselves up on the service and to highlight their special offers. While it will undoubtedly start charging for some services at some point, that won't be until it knows what works for both merchants and consumers.

As Groupon implies, we are entering a period of intense experimentation that will reshape local commerce. But while Groupon's model of daily deals could be a flash in the pan, Foursquare might be the real deal.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
ebooks
ebooksA special investigation by Andy McSmith
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Software Development Manager

£40000 - £50000 per annum: Recruitment Genius: This is an exciting opportunity...

Ashdown Group: Product Manager - (Product Marketing, Financial Services)

£30000 - £35000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...

Recruitment Genius: Compliance Assistant

£13000 per annum: Recruitment Genius: This Pension Specialist was established ...

Ashdown Group: Market Research Executive

£23000 - £26000 per annum + Benefits: Ashdown Group: Market Research Executive...

Day In a Page

Isis hostage crisis: The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power

Isis hostage crisis

The prisoner swap has only one purpose for the militants - recognition its Islamic State exists and that foreign nations acknowledge its power, says Robert Fisk
Missing salvage expert who found $50m of sunken treasure before disappearing, tracked down at last

The runaway buccaneers and the ship full of gold

Salvage expert Tommy Thompson found sunken treasure worth millions. Then he vanished... until now
Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Homeless Veterans appeal: ‘If you’re hard on the world you are hard on yourself’

Maverick artist Grayson Perry backs our campaign
Assisted Dying Bill: I want to be able to decide about my own death - I want to have control of my life

Assisted Dying Bill: 'I want control of my life'

This week the Assisted Dying Bill is debated in the Lords. Virginia Ironside, who has already made plans for her own self-deliverance, argues that it's time we allowed people a humane, compassionate death
Move over, kale - cabbage is the new rising star

Cabbage is king again

Sophie Morris banishes thoughts of soggy school dinners and turns over a new leaf
11 best winter skin treats

Give your moisturiser a helping hand: 11 best winter skin treats

Get an extra boost of nourishment from one of these hard-working products
Paul Scholes column: The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him

Paul Scholes column

The more Jose Mourinho attempts to influence match officials, the more they are likely to ignore him
Frank Warren column: No cigar, but pots of money: here come the Cubans

Frank Warren's Ringside

No cigar, but pots of money: here come the Cubans
Isis hostage crisis: Militant group stands strong as its numerous enemies fail to find a common plan to defeat it

Isis stands strong as its numerous enemies fail to find a common plan to defeat it

The jihadis are being squeezed militarily and economically, but there is no sign of an implosion, says Patrick Cockburn
Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action

Virtual reality: Seeing is believing

Virtual reality thrusts viewers into the frontline of global events - and puts film-goers at the heart of the action
Homeless Veterans appeal: MP says Coalition ‘not doing enough’

Homeless Veterans appeal

MP says Coalition ‘not doing enough’ to help
Larry David, Steve Coogan and other comedians share stories of depression in new documentary

Comedians share stories of depression

The director of the new documentary, Kevin Pollak, tells Jessica Barrett how he got them to talk
Has The Archers lost the plot with it's spicy storylines?

Has The Archers lost the plot?

A growing number of listeners are voicing their discontent over the rural soap's spicy storylines; so loudly that even the BBC's director-general seems worried, says Simon Kelner
English Heritage adds 14 post-war office buildings to its protected lists

14 office buildings added to protected lists

Christopher Beanland explores the underrated appeal of these palaces of pen-pushing
Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Human skull discovery in Israel proves humans lived side-by-side with Neanderthals

Scientists unearthed the cranial fragments from Manot Cave in West Galilee