9/14/2023 0 Comments Groupon business sign inThere is modest impact on the customers’ experience, as it could mean a new discovery or affordable items, let’s say a 4. The model does build a form of relationship, but not an embedded or particularly sticky one. There are many and ongoing benefits customers might derive, so that would be a 6. Groupon does have a strong network externality effect, as its business relies on hundreds of representatives who sign up hundreds of retailers. The benefits of Groupon (discounted prices and access to vendors you may not have known about) are largely optional or discretionary - it isn’t the kind of service one uses for essential goods and services. The user interface for Groupon offers no particular advantage, as the offers come by email. The model is based on individual transactions - users do not subscribe to Groupon rather, each payment is transactional. There are relatively few switching costs in the Groupon model - a customer signs up for free, the process is not onerous or difficult, and there is no customer loyalty, special discount, or other anti-switching incentives built into the program. Using a diagnostic quiz that grades the business model on sevearl factors, each on a scale of 1 to 7, I scored Groupon like this: Just a couple of weeks ago, I suggested in an article published in the European Financial Review that Groupon’s business model suffers from some alarming weaknesses. The smart money went along, with Groupon valued at $15-20 billion, according to some observers anticipating rich pickings in the IPO-to-come.īut not so fast. Somewhat astonishingly, Google’s offer was spurned and the company set its sights on going public. One of the fastest growing of the recent hatch of Internet darlings, the deal-a-day company was worth $5.3 billion to Google just a few short months ago, in November of 2010. Groupon is poised for its debut as a public company.
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