The Groupon business model: Groupon’s business model is scalable due to which they were able to expand into so many countries in such a short period of time. However, it is fairly simple, easily replicable.
• Groupon is more or less an aggregator platform for a two sided market and it cannot sustain unless both of the parties are benefited.
• In the long run the fact that even after high discounts, half of a merchant’s profit and non-returning customers, decline in quality of services might hamper its growth as merchants might get reluctant to partner up with them in long run.
• This, may destabilize the 2 sided market and may lead to a collapse. However, their new efforts like Groupon now & Groupon Rewards aim at improving this and might help the current situation.
Groupon’s Growth & Consumers: Groupon was using a very simple and universal business model which universally appealed to the merchants who were reluctant to spend money on advertising, which leads to its high scalability and explosive growth in its formative years all across the globe. This helped them raise over a $billion in fundraising and generate over $1.5 billion in revenue in over 500 cities. • This growth attracted the consumers at the same time as Groupon suddenly provided them an easy access to deals and try new things. These customers when introduced to a new merchants sometimes convert to regular customers too. • However, most of the consumers were attracted due to convenience, referrals and the quality of products and services that they were getting. Groupon & Merchants: Groupon provided local merchants to leverage technology in an accessible manner, which increased their reach to a better quality of customers without any upfront payment. • By 2011 it was running over 1000 deals every day working with merchants of 48 countries. • There were some very successful campaigns like American Apparel, Gap, Barnes & Noble and some local campaigns too which reflected well on Groupon’s track record and effectiveness. • Groupon was effectively able to increase the footfall to stores, however it might not lead to profit necessarily as deals included about 50% discounts & 50% cut of the sale for Groupon which meant the merchant getting only about 25% of their original revenue per sale. Groupon and American Apparel: Groupon presented a great opportunity for American Apparel with its online promotion, with over 133K coupons being sold, out of which 25% customers becoming regulars. Major assumptions to be made are 80% redemption rate for coupons, …show more content…
• Some major technological companies were also trying to get in the market like Facebook & Google.
• Traditional coupon magazines were also coming into competition such as Double Take deals were also coming into to the market with some deal aggregators like Newegg (niche), Slickdeals (gen).
Groupon seems to have is an early mover’s advantage and quirky marketing techniques which has established them in the market and provided them better market recognition than others.
Groupon 2.0: Groupon 2.0 is Groupon’s effort to update their services and keep on innovating to maintain relevancy in a highly competitive marketplace. Following are major Pros of this effort.
• Groupon Now the “hyper-Local” effort is aimed to make more customizable and short term deals, giving more power to merchants through yield management.
• Efforts to lock in customers using reward
• Groupon is more or less an aggregator platform for a two sided market and it cannot sustain unless both of the parties are benefited.
• In the long run the fact that even after high discounts, half of a merchant’s profit and non-returning customers, decline in quality of services might hamper its growth as merchants might get reluctant to partner up with them in long run.
• This, may destabilize the 2 sided market and may lead to a collapse. However, their new efforts like Groupon now & Groupon Rewards aim at improving this and might help the current situation.
Groupon’s Growth & Consumers: Groupon was using a very simple and universal business model which universally appealed to the merchants who were reluctant to spend money on advertising, which leads to its high scalability and explosive growth in its formative years all across the globe. This helped them raise over a $billion in fundraising and generate over $1.5 billion in revenue in over 500 cities. • This growth attracted the consumers at the same time as Groupon suddenly provided them an easy access to deals and try new things. These customers when introduced to a new merchants sometimes convert to regular customers too. • However, most of the consumers were attracted due to convenience, referrals and the quality of products and services that they were getting. Groupon & Merchants: Groupon provided local merchants to leverage technology in an accessible manner, which increased their reach to a better quality of customers without any upfront payment. • By 2011 it was running over 1000 deals every day working with merchants of 48 countries. • There were some very successful campaigns like American Apparel, Gap, Barnes & Noble and some local campaigns too which reflected well on Groupon’s track record and effectiveness. • Groupon was effectively able to increase the footfall to stores, however it might not lead to profit necessarily as deals included about 50% discounts & 50% cut of the sale for Groupon which meant the merchant getting only about 25% of their original revenue per sale. Groupon and American Apparel: Groupon presented a great opportunity for American Apparel with its online promotion, with over 133K coupons being sold, out of which 25% customers becoming regulars. Major assumptions to be made are 80% redemption rate for coupons, …show more content…
• Some major technological companies were also trying to get in the market like Facebook & Google.
• Traditional coupon magazines were also coming into competition such as Double Take deals were also coming into to the market with some deal aggregators like Newegg (niche), Slickdeals (gen).
Groupon seems to have is an early mover’s advantage and quirky marketing techniques which has established them in the market and provided them better market recognition than others.
Groupon 2.0: Groupon 2.0 is Groupon’s effort to update their services and keep on innovating to maintain relevancy in a highly competitive marketplace. Following are major Pros of this effort.
• Groupon Now the “hyper-Local” effort is aimed to make more customizable and short term deals, giving more power to merchants through yield management.
• Efforts to lock in customers using reward