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Capital Business
Posted at 12:10 PM ET, 03/05/2012

At new daily deal purveyor, you find the deals and share in the profit

Potomac-based AllStar Deals enters the highly saturated daily deals business when it debuts today, but the makeup of the start-up’s sales force might come as a bit of a surprise: You’re it.

The firm finds potential bars, restaurants and other merchants by arming their customers with information about the site and asking them to recruit their favorite establishments.

Any merchants that decides to use AllStar Deals collects 60 percent of the proceeds, All Star Deals pockets 32 percent and the customer who initiated the deal gets the final 8 percent.

“The user gets paid based on the number of deals that sell on the platform, so it’s not in the user’s best interest to find [just] any deal,” said founder Mark Levin. “They’re incentivized through cash to find a great deal.”

Levin said that strategy allows the company to bypass a lot of the boots-on-the-ground work that has required market leaders District-based Living Social and Chicago’s Groupon to amass a sales force of thousands of employees.

But when a company doesn’t own and control its sales force, it adds a greater degree of uncertainty to the business model. Volunteers must be self-motivated to pursue merchants, who in turn must be receptive to a sales pitch from someone off the street.

Levin, a serial entrepreneur whose online business selling eye care products shuttered in the dot-com bust, said the firm expects its top sellers to be stay-at-home mothers, college students and recent graduates.

“We haven’t spent any money on advertising so we looked at our initial adopters and that’s who that audience has been,” Levin said. “We do believe after this takes off that merchants will look to adopt their own deals.”

AllStar Deals will sell its first discounts today in Washington, San Francisco and Tampa, Fla. The company has raised $750,000 from angel investors to date, Levin said.

The company is entering the daily deals business at a time when the rest of the market is consolidating. Many small deal purveyors have either closed their doors or merged in an effort to gain market share.

Follow Steven Overly on Twitter: @StevenOverly

By  |  12:10 PM ET, 03/05/2012

 
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