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Are You Getting Your Groupon?

November 23, 2010

Get Your Groupon: Click Above!

$28 mani & pedi (valued at $56):  Well, I did run about 30 miles this week.  CLICK 

$8 for 6 buttercream cupcakes at Butter Lane (valued at $16):  Again, I did run 30 miles this week.  CLICK

$38 for six movie tickets (valued at $84):  Harry Potter 7 debuted this weekend!  CLICK.

And that’s how easy it is to secure exceptional deals in NYC (or other select cities).  The attraction is two-fold because yes, Groupon offers significant deals, but more importantly it gives people reasons to buy the deal.  

Groupon is the best thing to happen to New Yorkers since TKTS.  Only, Groupon offers substantial discounts on everything from pizza to yoga to skydiving.  And it’s accessible anytime, anywhere, which is both convenient and dangerous.  The way I see it:  Who doesn’t want 50% or 60% off? 

So how does it work?

Each day, Groupon offers a daily deal on the best food, service, product or event in your local city.  If enough people buy the Groupon, “the deal is on.”  Groupon can offer huge discounts by guaranteeing merchants a minimum number of customers, which it defines as the “tipping point.”  Genius, really:  A win for the business, a win for customers and a win for Groupon.

So, with countless players, why did Groupon surge to the top when its competitors couldn’t get out the gate?

Let’s break it down:

  • Local awareness:  It’s a personal guide to your city’s hidden gems; a reason to finally try out the place around the corner.   Or it’s the reason to meet up with friends at your favorite hangout – for half the price. 🙂  
  • Timeframe:  With only 24 hours to buy, Groupon skips the “I have to think about it” phase, because “if you snooze, you lose” – so people are compelled to buy.
  • Networking effect:  The more people use Groupon, the more valuable it becomes to customers, merchants, and Groupon (the business platform).
  • Exclusivity:  One deal per day avoids “I’ll get it next time.”  For customers and businesses alike, the next time could be weeks away or possibly never. 
  • Social media:  Through one clear, consistent and tantalizing voice, Groupon harnesses all channels of social media and supports a community, both online and off. I personally love the daily tip from “Groupon Says.”

So, what does the future have in store for Groupon? 

Groupon is the fastest growing company in web history and exceeded a $1 billion valuation in 16 months, falling four months shy of the current record holder, YouTube (12 months).  It’s rapid growth and success is rumored to have caught the attention of some major media giants.  And the recent word on the virtual street is that Google is considering purchasing Groupon for “well above” $3 billion.  Other names being thrown into the ring are Yahoo, EBay and Amazon.

But, is this the right move for the company?  Will it remain a win-win for everyone:  the customers and its organic business base?  A portion of Groupon’s identity is rooted in supporting the local business community.  “We want to do for local e-commerce what Amazon did for normal consumer goods,” said Groupon founder, Andrew Mason, in a Forbes interview in August.  Not to mention, Groupon originated from Mason’s nonprofit startup, The Point.

But, in September, Groupon grossed $11 million in one day from its national Gap Groupon and today’s deal is for Nordstrom Rack.  On the flip side, a recent story surfaced about a local Arizona business that claims Groupon backed out of what the owner believed to be a contract at the last minute.  (Read about it here).  So, how long will it be before national corporations squeeze out the local businesses completely? 

It’s possible Groupon launched Groupon Stores in part to spearhead any backlash associated with offering more high-profile (and very profitable) deals.  Groupon Stores provides a virtual market space for businesses to set up shop and offer deals every day.  This new platform is generating a mixed-bag of reviews because it dilutes the exclusivity we discussed earlier and, since businesses now control their own websites, it breaks away from the effective “one voice” social media strategy.

For most consumers the huge discounts will probably outweigh any loyalty to    local businesses.  So, for their sake, let’s hope Groupon Stores enjoys the same success as its parent company. 

For the time being, we’ll just have to sit back, wait and see.  But of course, we can pass the time by taking advantage of Groupon’s annual holiday, Grouponicus, which kicks off this week and promises discounts of up to 90 percent off.

 Happy Shopsgiving, or for those of you who don’t watch HIMYM, have a great Thanksgiving.

12-3-10 Update:  Google and Groupon acquisition talks have ended. For the full story click here: WSJ or google it!

2 Comments leave one →
  1. November 30, 2010 11:18 pm

    I’ve yet to jump on the Groupon bandwagon, but you’ve certainly convinced me to highly consider it! I guess I’ve hesitated because I know I would be that person buying every deal that opens on my screen. How could I not treat myself to an indulgent dessert after a good week of hitting the gym or or buy a nice pair of shoes after surviving a long semester? And if it’s at a discount, all the more reason to!
    I do hope that if this acquisition happens, Groupon will still cater to local businesses. You’re right that this site is a great way to educate locals about great restaurants and shops that they may not normally hear about, especially in a huge city like New York. While it’s great to get generous deals from Gap and Nordstrom Rack, they can’t forget about the smaller companies that have helped make the site so successful in the first place.
    PS: I love that you watch HIMYM too! Happy Slapsgiving!

    • December 1, 2010 2:36 pm

      Yes. Happy Slapsgiving – so glad you appreciate my humor and I’m not the only one laughing!
      It’s funny you mention getting sucked into buying something every day – because it is addicting. While my sister was reading my first draft last week, she bought two Groupons before making it to the end of the article – we found that pretty funny and ironic. 🙂 Since Groupon prides itself on its commitment to local businesses, let’s hope it continues to do so if it’s bought out by Google or a business of equal size. In my opinion – this is the just beginning of “group buying” and the company should let it ride for another two to three years before cashing out. I think they’ll be sorry to miss out on the possible growth potential in the coming years. Thanks for reading!

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