Even though Groupon is still privately owned, the company is estimated to be worth roughly $3 million and has recently expanded to over 29 countries. Not only are local businesses taking notice as ways to increase revenue within their own business, but also huge corporations like Google have become interested in this new social coupon. Recent talks show Google offering to buyout Groupon for $6 million. Obviously, Google recognizes the growing power of Groupon, but should Groupon sell? In only 2 years, Eric Lefkofsky has changed the way companies advertise their products on social media sites. With more than 95% of merchants willing to advertise future discounts, Groupon continues to grow and make big profits.
You make a very interesting and notable point about Groupon emerging during the financial crisis of 2008. Groupon's business model creates a beneficial exchange for both the consumer as well as the local business owner which can explain Groupon's popularity and growth. However, would Groupon's success, let alone Groupon itself, have been this successful had it not been for the financial crisis? The decreased wages and higher unemployment rates unquestionably impacted consumer's pockets which encouraged consumers to seek out the best value for their dollar and seek the most valuable options. But many of Groupon's offerings are more along the lines of offers that consumers want, not need, such as discounted spa services so perhaps it is the luxury aspect that lures consumers. Value is key and clearly Groupon has done a great job at showing it to both consumers and companies, both large and small.
ReplyDeleteTovah I agree with your view on GroupOn. GroupOn is successful and is growing at an astonishing rate. Just in two years it has increased the company’s worth to billions. Recently the Google, offered $5 Billion to take over the Groupon but according to the latest news released it has been known that the Chicago based company GroupOn has turned down the offer and decided to continue on its own. I think the decision made by its founder Eric Lefkofsky is correct and because if the company which was just launched could be worth billions in just two years then there is no doubt about the company’s potential. Now the company is in such a position that it does not matter who owns the company. The company has already established its name in today’s competitive market and people just care about the word ‘GroupOn’ not whether it is owned by Google or some private owners. Also the closest competitor of GroupOn is still ten times less powerful than GroupOn. I think consumers don’t want to take the pride of buying it from Google then buying at a cheaper and more discounted rate. That is how I think and I hope so do the rest.
ReplyDeleteI generally agree with yours analysis and the Google's acquisition, if true, in my pionion will brings enormous benefits to both the companies giving to the Mountain View's giant a wonderful opportunity to merge Groupon with its local business directory and, on the other hand, under the protective wing of Google, for Groupon will be much easier to dismiss all those competing services. In addition i believe that this acquisition could be extremely useful and strategic for Google to enter in some markets (China just to make an example) where Groupon is already a trust protagonist and where Google alone is meeting "some" difficulties to be accepted by the local government. Groupon is one of the biggest success stories of recent times of the Internet, and the Google's interest about the business is a confirmation.
ReplyDeleteI disagree with you Summia because i don't believe the crisis has played an important role in Groupon success. This kinds of services are news, cools (for someone), innovatives and permit to meet new people that share with you a particular desire, confirmed by the purchase. Is something different from the usual standard, and people are starving of this. Money is obviously important, but they are also in a non crisis situation.
Lorenzo
I don’t think that Groupon should sell its company. One approach that could take is to have a strategic alliance with one internet giant that can contribute to increase its operations, attracting even more customers. As you have mentioned this is a good time for Groupon’s expansion due to the increase popularity of social media worldwide; also the development and implementation in new technologies like portable internet devices contribute to its success, as internet becomes one the principal ways for people to make their decision making process.
ReplyDeleteGroupon turned out to be a genius idea and the timing (during the financial meltdown) was perfect. People all over the world have "tightened up" over the past four or five years. Everyone is trying to save their money and be conservative. For business owners, Groupon is cheap advertising and obviously a great way to get customers in the door. For consumers, Groupon offers great deals that allow people to afford things even when times are tough. In a way, I guess we can thank Groupon for doing their part in getting things going in the right direction economically in the United States.
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