Google Offers Debuts with High Hopes as a Groupon Rival

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Floyd's Coffee might go down in history as the first business to participate in Google's latest and greatest rollout, or it could be quietly swept under the rug along with Google Wave.

Following a massive advertising campaign in Portland, Ore., the first Google Offer went live yesterday. And appropriately enough for Stumptown, it's for coffee.

The deal offers 70 percent off at Floyd's Coffee, and costs $3 to get $10 worth of coffee and goodies. There was some initial confusion however, as the deal actually becomes redeemable Thursday, not Wednesday when the offer was rolled out. A few dozen people showed up wanting to redeem their coupon but had to be turned away.

Notwithstanding the mishap, the deal seems to be going well, with only 399 coupons left out of 2000, as of this writing. Google will offer deals every day, and one for the weekend. The company plans to roll out the service to the Bay Area and New York next, though no dates have been announced.

Google attempted to buy the largest player in the group-coupon space, Groupon, for a rumored 6 billion dollars last year. When Groupon rejected the bid, Google soon announced it was working on its own social coupon service. Groupon, which filed for initial public offering (IPO) on Thursday, currently distributes online coupons from merchants in 500 markets and 44 countries.

We've written before about the potential pitfalls of such coupon services for small businesses, and so far it doesn't seem that Google plans on doing much more than copying the proven model. Still, Google's reach and resources may prove to be enough for the giant to create significant space in the crowded market.

But the question everyone is asking is, is it too late? There are now literally dozens of similar services peppering every city and niche. And while many businesses have found the service to increase awareness and boost immediate sales, there is bound to be a saturation point, both for the user who may have little desire to sign up for another coupon service, and the business, who realizes such services are most effective few and far between.

Ilie Mitaru is a culture and business journalist and an occasional entrepreneur. He is the founder of the alternative business magazine Stake, set to launch in June.

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