BuyWithMe Continues Acquisition Spree With TownHog

BuyWithMe, the Boston-based daily deals site, is going on a buying spree of its own with the purchase of a larger daily deal operation: San Francisco-based TownHog, announced today.

Jim Crowley, the CEO of BuyWithMe, who spoke to Portfolio.com in an interview Thursday before the deal was announced, would not disclose the acquisition price but said that the site’s philosophy on merchant relationships is in sync with its own.

“As BuyWithMe looks for acquisitions, we’ve been trying to focus on merchant-centric, merchant-friendly sites like ours so that we can systematically provide a better experience for merchants, and for everyone involved,” Crowley said. “What we want is repeat transactions, and ultimately, what we’re trying to create is real customers for merchants.”

TownHog is the consumer-facing daily deal site owned by DotBlu, which operates a white-label platform through which it provides daily deal sites for media companies. Going forward, its white-label platform will be called BluLabel.

For BuyWithMe, the move will basically double the daily deal operation's size. It is one of the few daily deal sites with a national presence (although it still pales in comparison with biggies Groupon and Living Social), with markets in many major U.S. cities, such as Los Angeles, Chicago, Boston and New York. New offices in Atlanta and Miami opening this month will bring its market reach to 15 from 13 cities. TownHog has operations in 14 locations and also offers national deals in 48 markets, some of which overlap with BuyWithMe’s markets.

While he would not disclose BuyWithMe’s revenues, Crowley said that the company is growing rapidly. In December, it had 70 employees, and it now has a staff of about 200.

TownHog is not the only acquisition the company has made: it is the sixth since the start of the year. But the most pivotal one may be Edhance, which has a credit card-linked loyalty program that BuyWithMe is planning to mesh with its daily deal program.

Beginning in October, BuyWithMe merchants will be able to use the company’s new capabilities through Edhance to offer their customers rewards programs in addition to daily deals, thereby encouraging customers to return to the stores that they received deals in. This addresses a common gripe among merchants that daily deals bring one-time customers who are just there for a deep discount, never to return.

For merchants who don’t already have such programs, they can offer both rewards and a daily deals at once. For those that do have rewards programs, it lets merchants and customers avoid the hassle of handing out the usual punch-out paper cards or plastic cards that many use for such programs.

Another way BuyWithMe tries to help merchants is by screening its daily deal offers to leave out a merchant's regular customers, or to offer regular customers extra discounts, depending on what the merchant wants. Going forward, BuyWithMe is focusing more on mobile, through its own app, which is available on the iPhone and Android smartphone platforms, and through its partnership with Foursquare.

“While this business has grown up as an email business, it is becoming a mobile business,” Crowley says.

Groupon’s delay of its IPO because of the rocky stock market is actually a sign of the sector's strength, Crowley says, adding that there is plenty of room for daily deal growth in a North American market where local merchants rake in $2.7 trillion billion dollars in revenues.

“The penetration of all of us into our markets is still relatively low,” Crowley says. “This is a space that is very big, and there will be several large companies that emerge here. There is a segmentation that starts to happen in every space, and it’s happening in this one.”

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Teresa Novellino writes for Portfolio.com