Microsoft launches Group Buying startup Cudo

Microsoft has entered the Group Buying market by launching a joint venture in Australia with 2 of the country’s largest print and digital media companies.

The startup, named Cudo, launched last week and sees Microsoft, publishing giant PBL and  NineMSN (itself a joint venture between Microsoft and PBL) join forces to try and dominate a local market that has seen a raft of new, but relatively small, group buying startups this year.

Cudo is being run by former Microsoft Australia Director of Business Development, Billy Tucker who, oddly enough, blogged a month before the launch of Cudo about how the Australian group buying market had “gone mad”.

In that same blog post he also hypothesised that a number of poorly funded group buying “pretenders” would come and go over the coming months…maybe a hint that Cudo might have some interest in buying market share or, more likely, Tucker soliloquizing about the fate of smaller group buying start-ups after Cudo entered the market.

In a recent interview with Smart Company, Tucker explained more about Cudo’s strategy.

In relation to his target audience he said he wasn’t interested in going for the regular tech savvy crowd but instead was interested in mainstream consumers:

“If you walk down the street, talk to a group of people about group buying, they’ll have never heard of it. That’s the audience we’re talking about and that’s who we want”

He also highlighted that Cudo wanted to quickly get to the number one position in Australia:

“We need to take the lead in a short order. The vision for us is to go hard on advertising… through the PBL network including ACP magazines and Ninemsn.”

In addition to that there’s also a national television campaign that has already launched and a $10 referral voucher to spend on Cudo purchases (perhaps an extension of lessons learned from the Bing cashback campaign that helped Microsoft boost market share in the search space).

While all the above may seem excessive for the relatively nascent group buying space, it’s necessary if Cudo is to reach their very lofty target of 10 Million customers in the first month –  a huge target, even if speaking about repeat purchases, when you consider that Australia only has a population of 21 Million.

If they can even come close to that number I wouldn’t be surprised to see digital media companies around the world with their own group buying startups trying wrestle the market away from current runaway leaders like Groupon.

With switching costs a non-issue in terms of customer acquisition, and an ability to gather the attention of both sellers and buyers alike, the market seems primed for digital media giants, with their massive salesforces and huge audiences, to make a serious run at the space.