Groupon is a website service that specializes in offering its subscribers special deals. Haven’t heard of it? Then jump on the bandwagon!! Groupon is a website that offers discounted rates for all types of activities within your city, it is able to do so, because it ensures to the business offering the special deal that the special deal will result in a greater majority of customers. Simply put, it is similar to how a business lowers its price or offers special deals when selling in bulk, or when a service is being sold to a big group. In this case the group is much bigger and therefore the price can be lowered drastically. The more people subscribe through Groupon and the more the company expands the greater the number of deals and the better their price. Currently Groupon is the absolute leader in this industry, though many other companies have copied it, none are a direct threat. The only that comes close is LivingSocial. Living Social though has much catching up to do. Considering that this year Groupon reached over 150 million $ in sales while LivingSocial only reached 49 million, it seems unlikely at this stage that LivingSocial will ever catch up, especially considering that this business grows exponentially. In fact Groupon is only 2 years old. In such short time its growth is truly astounding; currently it is valued at over 1.5 billion $. LivingSocial’s growth is also astounding, yet not enough. Nonetheless though LivingSocial might never be able to compete with Groupon it is likely that it will never be driven out of the market. Aside from LivingSocial, there are many other imitations of Groupon, yet Groupon is not threatened by any of these. Actually its competitors have favored its growth. How? Simple, imitations of Groupon began in Chicago in 2008, start up in their local cities, doing all the work, all the networking and research and then Groupon comes in, without having to go through the trouble of organizing anything and simply buying off these small companies. Impressive right?!
So what is the buzz on Groupon? Well rumor has it that Google is interested in buying Groupon. Could this be? Well sure it can, Google’s growth is truly intimidating, in fact recently this has lead to a certain degree of scrutiny, where Google is being accused of breaking Antitrust laws. The question therefore is: Will Google buy up Groupon? And what will result from this? One thing is for sure. Google is certainly capable of purchasing Groupon, as well as LivingSocial and any other possible competitor. Yet how will this further expansion favor Google’s already tainted image as a growing monopoly?
Best, Gian Marco
It's funny that that's your title because after reading a few articles about Groupon, I applaud them for rejecting Googles offer, even if it were for $6 billion. Google is trying to control every e-commerce website out there because it wants infinite profits and infinite control. Groupon didn't sell it for either 2 reasons: It does not want Google to take control and advantage of their website and customers or because Groupon themselves have plans to expand and they are passionate about what they do.
ReplyDeleteWell you were right to mention the possibility that Andrew Mason might not be willing to sell the company to Google. Indeed, Groupon just denied a $ 6 billion offer from them. Here's an interesting article about it from Bloomberg.
ReplyDeleteI do believe that it was a smart move from Groupon to stay independent for now, with all the potential they have for further growth. An who knows maybe in some time they'll get a better offer from Google or another company; if they do decide to sell in the future. Well maybe I'm just being too optimitic here but this decision shows that Mason has great expectations for his company.
Gian Marco, while you made an excellent point regarding the growth of Groupon, whether the site can continue sustained growth despite the efforts of competition and the reluctance previous advertisers is questionable. Competition is growly comparably slowly; however, since a reported 42% of previous advertisers refuse to repeatedly use Groupon (they were dissatisfied with the results), the site will be fighting with a growing number of deal websites for a diminishing number of deals. This is all discussed in further detail in my blog, Marketing to the World.
ReplyDeleteThe Chicago Tribune stated that Groupon denied Google's bid. But you did bring up an interesting point that Google has been a growing monopoly. With its acquisition of travel website techonology and now trying to get its hands on another local database, Google is slowly getting to know every one of us better than we know ourselves. Im glad to see that Groupon did not sell out, and hope to see these two entrepreneurs succeed on their own.
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