I was taking a look at Steven Carpenter’s article “A TC Teardown: What Makes Groupon Tick” and I can infer that Groupon is the perfect Business for times of economical contraction.
Groupon takes advantage of groups and sell discounts and deals of other companies, they offer deals per city and currently the company is in almost every city in the US and serves around 52 markets. Groupon earns a share of their sales and it’s clients attract more customers, more volume, which is translated in an increase in sales. But this are not the only benefits of Groupon you can check this article of Evan Miller and he explains why people love Groupon, you could even finance a small business with coupons. I don’t know how accurate could this be, but at least is a possibility.
Some people question the viability of this business model. But if you take a look to some of the facts I don’t know up to what point is questionable. Groupon was established in November 2008; a couple of months after the financial melt down of Walls Street, not a good scene for a start up. Moreover Groupon has not only survived over the financial crisis, according to Carpenter’s analysis, since November 2009 sales has multiplied by 5. Carpenter analyzes two days, November 6th 2009 and April 16th 2010; the volume of customers has increase in 358% and the total volume in coupons sales in 428%. Besides the traffic of users has boosted from 900,000 in November 2009 to 3 million users in April 2010.
Even though “the competition is growing like mushrooms” Groupon had known how to maintain the leadership. Receiving this year buying offer from Google for some billions. To make your own conclusions you can check this article of the Wall Street Journal about “Why Groupon was right to say no to Gloogle?”
So, why is not groupon’s business model viable?
