Shoppers in today’s economy are on the hunt for bargains, deals that will satisfy needs and thin pocket books. This trend has led to an online deals industry that has received increased attention over the past two years and especially within the last week. While rumors have swirled around a possible $5 to $6 billion Google acquisition of Groupon, Amazon.com quietly invested $175M in LivingSocial. Groupon is the number one socially fueled coupon site, dominating the industry; LivingSocial lags behind in second.
Compared to the plethora of coupon websites available online today, Groupon has been wildly successful. Its daily group-discount business model eclipsed the $1B revenue mark within its first two years of operation (the fastest e-business to accomplish such a feat). Yet what is distressing for a company like Groupon, and its potential investors, is that its business model is simple and can easily be duplicated. All that is needed is an email list and a deal. Internet clones have sprouted around the world; such competitors can easily sweep up the market share left behind by Groupon.
The daily-deal business model incites a frenzy among consumers and is part of what makes Groupon great, but is not without its drawbacks. Groupon now has a network of over 3,500 companies that find being featured on its site comparable to being selected for Oprah’s favorite things list.
Alhough some deals don’t result in a profit for businesses, small local businesses gain in the form of exposure. At the same time, companies are limited to publishing just one deal a day, which could pose a problem in the future if competitors decide to take aim at Groupon’s market share and sweep up deals not published by it.
If Groupon and Google strike a deal, the future of the couponing company has a better chance of continuing its fast paced growth if it lands on Google's search engine home page, than if it remains privately owned. Google’s web applications, along with its growing presence in the mobile phone industry with its Android OS platform and mobile apps for iPhone devices would instantly push Groupon deal awareness to the masses.
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I hadn't heard about the Amazon deal but I think it's a great move on their part considering LivingSocial rapid growth. Especially now that Groupon rejected Google's offer, I think there will be even more room for LivingSocial to exploit the new partnership and perhaps gain some terrain.
ReplyDeleteAs said above by vero in the previous comment, Groupon has turned down Google's $6 billion offer. Take a look here for more information, where the article was written by
ReplyDeleteSavitz. Also take a look at my blog, Dabz.
Yes i fully agree with you. If it had accepted the offer today i think it would get alot more exposer and us as consumers would be better off as well. We'll see if they made the right decision later on next year when they announce if theyre doing an IPO. It would have been a similar situation as the Android OS, great software being brought to the masses by a major company.
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