Will Rearden’s Acquisition of HomeRun Become the First B2B “Social Discount” Play?

Amidst all the news coming out of SAP early last week with the Crossgate deal and a nasty head cold going around the office that's slowed the usual pace of developing current content, we've been slow to cover some major news at Rearden Commerce, including a large funding round and an acquisition. Last week, Rearden acquired a company that may not seem like a fit with the procurement or network space at first, but in fact, is quite a fascinating potential fit if they can successfully plug the capability into their platform and drive real adoption. The news we speak of here of course is Rearden's acquisition of HomeRun, a self-described "social-buying service" and platform which "powers group commerce programs for many of the best known consumer web sites," according to Rearden.

Here in Chicago, many of us know best of the daily deal site Groupon (both for its creative -- some might say IPO killing -- accounting treatment as well as the discounts it offers such as the cheap Economist subscription that we took advantage of earlier this year). But there are many other deal sites besides Groupon, and HomeRun is one of the many players in a space that is starting to consolidate. While the business model of these services is largely similar (i.e., suppliers pay a percentage of revenue based on a specific discount program to draw customers into their store or accept their offer), the application of the model at Rearden will be quite different, at least on the "buy" side.

Press releases of deals only can explain the actual value or perceived synergies so much. It's far more valuable to read the positioning to customers (i.e., suppliers in this case). In a note to customers after the deal was announced, Brad Brodigan, HomeRun.com's CEO, suggests that "As part of Rearden and in leveraging Deem [the Rearden platform], our ability to maximize the effectiveness of offers and gain new customers for you will multiply. The integration of HomeRun.com onto the Deem platform will enable us to connect you with those 1.2 million merchants and many millions of consumers already on the Deem platform who are in the market looking to buy what you are selling."

With Rearden, suppliers on the HomeRun platform will eventually be able to take other forms of "currency" as well. To wit, once the platforms are integrated, suppliers will have "the option to allow your customers to buy with reward points earned on Deem -- along with transacting via traditional payment methods." But in the meantime, what is a real use case for how frontline employees in a company could take advantage of the HomeRun platform as part of their Rearden experience?

Consider the following hypothetical example: imagine that you're meeting a client in Philadelphia, having flown in from Chicago. The client (in from Paris) happens to have a thing for Michelin starred restaurants. Knowing this (because it's in your Rearden profile that your biggest account is a foodie Francophile) the Rearden system suggests Le Bec Fin. But this, of course, is the most expensive restaurant in the city of Brotherly Love. Still, in the Georges Perrier mini food empire, there might be other restaurants where the owner wants to offer a discount to fill tables after a slow mid-winter season. The Rearden platform (Deem) might also suggest this alternative, lower-cost option (coupon included) and the traveler would then book his reservation with Deem, which can then be configured to send out an auto-invite to the person who is joining him. Then, our traveler's calendar is updated with the information.

After the fine (discounted meal), the traveler will have had a long night. The next morning, when his flight is due to leave, he's overslept, but the good news is that one of the now famous east coast ice storms has set in. Our traveler is prompted to cancel his flight, yet Deem suggests an alternative itinerary that adjusts the rest of his travel schedule accordingly after re-booking, while at the same time also prompting the traveler to cancel his previous itinerary. All the while in the background, the application adjusts expense accruals and records changes. Then the Rearden T&E tool (part of the platform) is "automatically reconciled to comply with corporate policies -- and this information can be applied to decisions made by the traveler in the future," as Rearden suggests is possible.

Scenarios like this suggest the future of intermediaries like Rearden may be very bright. On the one side, they provide a full-service P2P, T&E and travel toolset that can incorporate full compliance to corporate standards, even in a mobile device (as well as the supplier network to make booking and buying simple). And on the other, they service certain suppliers, taking a percentage of the discount that the buying organization is benefiting from as well or a piece of the air/hotel booking transaction. Of course full platform standardization at Rearden on a future single "Deem" architecture may be quarters or years out. But in the meantime, even with various acquired solutions that are more loosely coupled but still integrated, there can be significant value created on both sides of the buying and selling transaction.

Jason Busch

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