On Monday, the ever-expanding daily deals site Groupon announced its acquisition of Pelago, the parent company of the check-in site Whrrl, for an undisclosed sum. Since Groupon plans to shutter Whrrl at the end of the month, it’s likely the acquisition was more about the company’s technology and talent.
Jeff Holden, Pelago’s CEO and a former Amazon (AMZN) executive, will become a head of product development of Groupon, as the rest of the company’s team will take on positions in “Grouponnovations.” And although Whrrl is nearing its end, Holden said in a blog post that it would be safe to assume that “the ideas underpinning Whrrl and many of the inventions contained within may reemerge under the Groupon banner.”
Groupon already has its own iPhone, BlackBerry and Android apps as well as an easy-to-navigate mobile site. Its apps provide a deal a day in a chosen city, just as the site does, as well as list of nearby deals. Groupon could use its Pelago purchase to add a navigation or map component to this feature, in addition to possibly encouraging users to check-in to receive more on-the-spot deals. A coupon could convince those skeptical of Foursquare and similar check-in sites to sign on, if only for a shot at savings.
Groupon CEO Andrew Mason said in his own blog post that the acquisition supports Groupon’s core mission, which is “about discovering what you didn’t know you didn’t know, right in your own backyard.” He noted that Holden’s understanding of consumer buying behavior and the importance of a great user experience were attractive qualities to Groupon. Both seem are inextricably linked to both daily deal sites and check-in services.
The marriage of this popular daily deal platform and a not-as-well-known check-in service should put other leaders in both areas, including Foursquare and LivingSocial, on high alert. The integration of Pelago’s technology into the Groupon platform, how ever it is accomplished, will provide a good guide as to whether mid-sized entities can compete in a land already being inhabited by conglomerates such as Google (GOOG) and Facebook.