Groupon, launched in November 2008 in Chicago, features daily deals on the best stuff to do, see, eat, and buy in more than 400 markets and thousands of cities around the world. By promising businesses a minimum number of customers, they can offer deals that aren't available elsewhere.
Groupon brings buyers and sellers together in a fun and collaborative way that offers the consumer an unbeatable deal, and businesses a large number of new customers. To date, Groupon has saved consumers more than a billion dollars and has generated millions in revenue for the businesses it features.
Groupon originated the concept of using collective buying to get a daily deal on local goods and services, and is a project of ThePoint.com, an online community launched in 2007 for organizing all forms of group action and fundraising around a "tipping point" of required participants.
What group on does:
Groupon has extended its offerings for the local merchants meaningfully and will likely continue to do so. The company is transforming itself from a daily deals business to what Andrew Mason, Groupon's CEO, calls "an operating system for local commerce." The goal is for Groupon to become a major commerce platform and an end-to-end solution provider to local merchants. Today, Groupon's businesses include:
Daily Deals: The original daily deals business is still at the core of Groupon's identity.
Goods and Getaways: Deals on physical goods and vacations.
Groupon Now!: A yield management service that allows businesses to market their unused capacity and/or inventory at a discount to maximize profits.
Groupon Rewards: An easy to use customer retention loyalty program.
Groupon Payments: A payment processing service that can turn any iPhone or iPod touch into a POS system.
BreadCrumb: A restaurant management system built for the iPad.
Savored: A restaurant reservation and yield management software through which restaurants can take online reservations and offer time-sensitive discounts.
Most of the businesses that Groupon operates in are very competitive. While the company lacks any discernible moats, it does possess some important competitive advantages. These include:
Brand Name Recognition: Groupon is by far the best known company in the daily deals business. In fact, many people call daily deals "Groupons" even when referring to deals from competitors. This is akin to people calling tissue paper "Kleenex" or MP3 players "iPods." It demonstrates a powerful and valuable brand.
Scale: Scale is important in more than one way in this business. As the largest daily deals company in the world, Groupon can leverage its sales organization and database of businesses to scale its recent and future small acquisitions into globally relevant brands and services I would not be surprised if Groupon makes a move into POS, analytics, accounting, and inventory management software-as-a-service area for small, local merchants.
Of course, Groupon does not have the upper hand on its larger competitors such as Google and Amazon as far as scale goes. However, it can easily out-compete the smaller players with less resources. .
Sales and Analytics Expertise
Designing an effective deal is not as straightforward as it seems. A good deal brings in as many clients as possible without going over budget or overwhelming the business with a flood of customers. From the merchant's perspective, a good deal also encourages customers to spend beyond the value of their voucher.
With its vast database of past deals and analytical data across many businesses and geographies, Groupon is strongly positioned in the industry to design the best deals for its merchants and its end users. Groupon can also apply its knowledge database to its new offerings, such as Groupon Rewards and Groupon Now.