Grouponomics

By Felix Salmon
May 4, 2011
said to be worth as much as $25 billion. What's going on here?

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18 months ago, Groupon didn’t exist. Today, it has over 70 million users in 500-odd different markets, is making more than a billion dollars a year, has dozens if not hundreds of copycat rivals, and is said to be worth as much as $25 billion. What’s going on here? There’s obviously something clever and innovative behind Groupon — but what is it? Given that customers with Groupons are saving lots of money on goods and services, how can this possibly be good for merchants? Is there a catch somewhere? Is TPG’s David Bonderman right when he says that “Groupon doesn’t do anything that four of us with a phone couldn’t do”? Or is there actually something very special about the company?

Bonderman’s thesis is basically that the value of Groupon lies in the company’s business model, and that since barriers to entry are basically zero, there’s therefore no value there. But I don’t buy that. There are significant network effects at play here: the more people Groupon signs up, the more targeted its deals can be. And there’s another social aspect to Groupon’s success I’ll come to in a minute.

But first it’s worth looking at the innovation in the name of the company: the idea that coupons only become activated once a certain minimum number of people have signed up for them. This is essentially a guarantee for the merchant that the needle will be moved, that their effort won’t be wasted. With traditional advertising or even with old-fashioned coupons, a merchant never has any guarantee that they will be noticed or make any difference. But with a Groupon, you know that hundreds of people will be so enticed by your offer that they’re willing to pay real money to access it. That kind of guaranteed engagement is hugely valuable, and more or less unprecedented in the world of marketing and advertising.

Then there’s the twist in the “coupon” part of the name. No longer do merchants pay money for the privilege of giving coupons away for free in local newspapers. Instead, they receive money — half of the total paid up front. There’s something extremely gratifying about being paid to offer discounts to new customers.

But there’s a lot more to Groupon than just groups and coupons. Groupons behave differently for different types of merchants, so let’s just look at one sector, which I think is Groupon’s biggest: restaurants. (One of the reasons that OpenTable’s share price is so high is that there’s a lot of hope it’s going to make serious inroads into this space, where it has certain advantages over Groupon, like being able to target people according to where they’ve eaten in the past.)

The most important aspect of a restaurant Groupon is probably that it’s local. Before Groupon came along, there was no effective way for merchants to reach consumers in their area, while excluding everybody else. If you’re a neighborhood restaurant, you don’t want to entice people who live miles away: you want to reach locals. And while Groupon isn’t quite there yet — especially in New York, where a restaurant more than a few blocks away can feel like a schlep — it’s orders of magnitude better at targeting than anything which came before it. And it’s improving every day.

(Incidentally, one of life’s great mysteries is why the New York Times is spending tens of millions of dollars building and promoting its easily-circumventable paywall, when it could have built a first-rate Groupon clone instead. The NYT has the exact home addresses — and the associated email addresses — of hundreds of thousands of well-heeled newspaper subscribers in a rich city of tiny neighborhoods. It also has a sales force which talks to local businesses regularly. It should own this space in New York City, instead of ceding it to arrivistes from Chicago who have much less specificity as to where exactly their subscribers live.)

Beyond that, there’s an uncommonly large number of ways in which participating in a Groupon deal can benefit a restaurant or other merchant. For one thing, the offer will go out to a targeted group of people in exactly your neighborhood — which means that even if none of them sign up for the deal, they’ll still have seen customized advertising for you, from a company (Groupon) which they trust.

And when a few hundred people have signed up for your deal, you get a huge amount of mindshare from them. Many will redeem the Groupon very quickly, but a lot of them will wait a while, thinking about you in the back of their minds all the time. If a friend asks whether they know a good local restaurant, they might well think of your name even if they haven’t been yet. And after they’ve been, they know exactly where you are and what you serve — information which you want locals to know but which can be very hard to broadcast.

More generally, of course, Groupons provide an important nudge to jolt people out of their day-to-day habits and try something new. A lot of us might see a new place open up and think to ourselves that we should try it some time; a Groupon turns that vague sense into something we really must do if we don’t want to lose the money we spent on the Groupon. By forcing people to pay for their Groupon, restaurants lock in new customers in a way that old-fashioned coupons never could.

In that sense, from the consumer’s perspective, a Groupon is a commitment device: it’s a way of forcing yourself to do something you really want to try at some point, but know that you might otherwise never get around to. The merchant persuades the consumer to make that commitment right now by making sure that the offer only lasts a very short time — usually only a day or two. The consumer knows that if they don’t buy the Groupon now, they’ve missed their chance.

Groupons can very good at driving traffic during slow periods: I spoke to Will Sanders, of Giorgio’s of Gramercy, and he told me that he timed its Groupon “to create a surge of business in an otherwise soft couple of months after the holidays.” For any kind of business which needs a certain amount of volume to keep ticking over in fallow times, Groupons can be exactly what the doctor ordered.

And although Groupons can be very deeply discounted, merchants can still make money on them. Indeed, in one survey by Utpal Dholakia of Rice University, 66% of merchants offering a Groupon said that the offer was profitable for them in and of itself — not including any subsequent repeat business from new customers.

At Giorgio’s, for instance, diners paid $15 for their Groupon — which gave them $30 of food. But dinner for two at Giorgio’s, with some kind of alcohol, can easily run to $100 or more. So even after knocking $22.50 off the bill (remember that Giorgio’s kept $7.50 of the proceeds of the Groupon), the restaurant would often still make money.

According to one Groupon survey, diners spending their Groupon at a restaurant averaged a check 80% greater than the face value of the Groupon itself. That’s no coincidence: the value of a Groupon is — or should be — carefully calibrated so that it’s hard to spend just the Groupon with no extra cash on top.

Merchants who get that calculation wrong can suffer greatly as a result: if you sell goods for $40, and you send out a Groupon offering $40 of goods for $20, then you’re likely to lose a lot of money very quickly. On the other hand, if your goods cost $100 on average, then you can make money on every redemption.

Does this mean that from a consumer point of view, we should look for deals where we can spend only the amount of the Groupon, and nothing more? Certainly that’s the route to greatest savings, on a percentage-of-total-spend basis. But that doesn’t mean it’s the sensible thing to do.

After all, if you spend good money on a Groupon and then have a meal you don’t like, that’s never going to be much of a bargain. On the other hand, if that Groupon helps you to discover a new neighborhood gem where you go on to become a regular, then that’s a genuine and highly valuable service that it has performed, no matter how much money you spend on your first visit.

If you’re already a regular somewhere, of course, then buying its Groupon is a no-brainer. And the restaurateur won’t begrudge you the savings, either: all restaurant owners want to treat their regulars as well as they can.

But if you don’t know exactly what you’re getting, then the risk is higher — and it’s not just the risk that you won’t like your meal. There’s also the risk of the restaurant being overcrowded with newbies bearing coupons — for that reason, it might be a good idea to wait a couple of weeks before redeeming your Groupon. On the other hand, there’s the opposite risk that your Groupon will expire unused, as you always mean to get around to redeeming it but never do. In which case it’s wasted money for you, and the restaurant doesn’t even get the opportunity to show you what it’s capable of. The only real winner in this case is Groupon itself.

Groupons are particularly attractive for restaurants, where the fixed costs are reasonably high and the profits start arriving only when you reach a certain level of volume. For merchants, by contrast, the deals can be less good: if you’re a bookstore, say, there’s a real risk that people will redeem their Groupon once, with the bookseller losing money on the transaction, and then simply revert to ordering books on Amazon thereafter.

On the other hand, as Giorgio’s Sanders notes, Groupons don’t work for all restaurants. “There are questions of prestige,” he says. “For Daniel, it would raise questions. For us, we’re a neighborhood restaurant, so it works well.”

Which brings me to the other important social aspect of Groupon’s success. For all that digital-marketing types love to talk about creating viral social-media campaigns and the like, social media is at heart a fantastic way for companies to compete on quality rather than marketing glitz. Social media is all about turning word-of-mouth into a tool which is much more powerful than it has ever been from a marketing perspective. And the best way to get great word-of-mouth is to deliver fantastic service. For a small company or even a large company which is great at what it does and never does any marketing per se, social media is a godsend.

And when it comes to the Groupon space, the quality and sophistication of the Groupon or Groupon clone matters a great deal. (One of the downsides, to a merchant, of running a Groupon is that the owners are then inevitably pestered by dozens of Groupon clones, all trying to sell a similar service.)

Groupon’s CEO, Andrew Mason, attributes his company’s success not to the genius of the idea itself, but rather to Groupon’s ability to execute — to keep both consumers and merchants happy. According to Groupon spokeswoman Julie Mossler, more than 95% of merchants would run their deal again or recommend Groupon to a fellow merchant. (Dholakia’s numbers are lower, but still high.) Keeping that number high is not easy: the company needs to be able to give good quantitative advice to merchants on issues such as where to price the Groupon, where to set the minimum and maximum number to be sold, how to avoid being overwhelmed by a huge influx of bargain-hunters, and the like.

It’s very easy to screw up these things, and if Groupon and similar companies like Gilt Groupe end up having a lot of long-term success, it will be because they put enormous amounts of effort into ongoing customer service, rather than just putting four sales guys in a room with a telephone and putting them on commission. Those brands will get slaughtered by the social-media word-of-mouth machine.

In the popular imagination, then, the idea behind a Groupon is that it attracts new customers to a restaurant, some of whom become regulars and therefore very profitable. Long-term profits from the few, in this model, make up for short-term losses from the many who will never return.

And that is indeed a central part of how Groupon works — it’s just not the only way that restaurants get value from the site. In that sense, restaurants are much like Groupon itself. It makes money on every sale — but it will only see its margins start to rise impressively if and when its merchants start coming back on a regular basis. At that point, the cost of setting up and selling a new deal comes down dramatically, and Groupon’s profits on the deal — after accounting for the cost of their salesperson’s time — rise substantially. Groupon itself, as much as its merchants, is counting on repeat business. And that comes from having a positive reputation which can spread like wildfire over Facebook and other social networks.

 

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Comments
25 comments so far

Really? If I am a restaurant and I start using Groupon repeatedly, then won’t my customers come to RELY on Groupons and stop coming without one?

I think in the early days the incentive was to get exposure. But now that SOOO many people sign up for each deal, I think the truth is that merchants expect a third to a half of them never to be redeemed. If you get a 10% bump in business (some of which will stick) and the fee to Groupon is paid for by people who never get around to redeeming the coupon–you win.

I’m really wary of Groupon. Haven’t bought anything from them in many months and am thinking of turning off the junkmail spigot altogether. Am I alone?

Posted by LadyGodiva | Report as abusive

Felix, I don’t think anyone disputes that there is an interesting value proposition here. The issue is that, as you say yourself, there are few barriers to entry, and many non-Groupons are likely to enter the space (you yourself suggest NYT and OpenTable as potential competitors, to say nothing of Living Social and their ilk), so how will Groupon be able to capture any value? It’s very, very hard to create sustainable profits just from an “ability to execute,” especially when we’re talking about a company with basically no track record.

Posted by right | Report as abusive

I hate OpenTable. Sorry, but the restrictions on it…ridiculous! I have to spend more than I want to, to get any “bargains”.

Posted by GRRR | Report as abusive

“[The NYT] should own this space in New York City, instead of ceding it to arrivistes from Chicago….”

“arrivistes from Chicago”?

wow. for a non-native NYer you’re definitely in a New York State of mind.

Posted by dedalus | Report as abusive

Felix
I wrote the book on this for small businesses to make informed decision about choosing Groupon and others.
You neglect to ask the basic business questions – setting aside all the social media, hyper-local buzz:
1. What is the net new value created by Groupon?
2. Is this a marketing channel to get a business’ message across to those who have not heard about it or is it a sales channel to reach new customers that are not reachable with current channel?
3. What at the Costs – Opportunity costs, Opportunity lost, Capacity costs, Cannibalization costs? You say current customers will use the deal ad the businesses will be happy to oblige. That is the cannibalization cost.
4. What will it do to the customer mix? Is deal seeking customer the right choice?
5. What other choices are available to the business instead of giving away profits for the hope of getting regulars?

If these sites do indeed deliver longterm customer value then why not tie their value-capture to this future profit over upfront 50% cost?

-Rags Srinivasan
Book: http://amzn.to/mDhBmA

Posted by RagsSrinivasan | Report as abusive

I would never recommend a restaurant that uses a groupon deal, unless it’s a brand new restaurant. smacks of utter desperation. i’ve also stopped buying restaurant groupons as most are semi-ripoffs (e.g. here in london they will sell you a “discounted” meal, but then charge 12.5% service charge on the theoretical full meal price (thus doubling the bill)) and other shenanigans of same order.

now, for novel experiences like going indoor skydiving etc. i think it’s an ok way to get it at a discount. But even there after 6 months am getting pretty blase about these (how many times would you be interested to try fish pedicure). i haven’t even used half of the groupons i’ve bought so far, and it’s been months since i even looked at the emails from groupon before deleting them.

Basically, good idea, but gets old really quick.

Posted by tiger4 | Report as abusive

Felix,thanks for the insights. I’d be quite interested to get your thoughts on this piece http://www.businessweek.com/magazine/con tent/11_17/b4225060960537.htm – especially in the context of the current tech cycle’s legacy (picking up somewhat on Bonderman’s thesis, I suppose).

Posted by GregIvanov | Report as abusive

To right’s point you mention the lack of competitive barriers and network effects but don’t get round to addressing them (and you had 2,200 words!).

Posted by shehab | Report as abusive

This post is nothing more than Felix Salmon trying to convince himself that the good money he just spent on a Groupon is going to be worth something:

“But if Felix doesn’t know exactly what he’s getting, then the risk is higher — and it’s not just the risk that Felix won’t like his meal. There’s also the risk of the restaurant being overcrowded with newbies bearing coupons — for that reason, it might be a good idea [for Felix] to wait a couple of weeks before redeeming his Groupon.”

Posted by flippant | Report as abusive

Great insights. You might also want to check out the study “A Month in the Life of Groupon” that we uploaded yesterday: http://arxiv.org/abs/1105.0903

Posted by m.potamias | Report as abusive

Felix your article is very interesting. However the quantitative data in the university study that you refer to proves the opposite point. Here is what Prof. Utpal M. Dholakia says: “When analyzing the profit impact of a price promotion, marketers usually assume that a significant proportion of those availing of the discount will purchase more products and services at full price, and become repeat customers. These benefits never materialized for this group of businesses in our study. Not surprisingly, few of these businesses (8%) said they will run a Groupon promotion again. Restaurants appear particularly susceptible to these negative outcomes: 42% of the restaurants in our study reported unprofitable Groupon promotions. One restaurant owner observed that “Most of the Grouponers were what we call ‘deal-seekers’; they felt entitled to special treatment, didn’t spend more than what the Groupon itself cost, they didn’t tip, and most won’t be repeat customers.”
Bottom line. Groupon does not work for restaurants. That is the reason why new start-ups with compltetely opposite business models are having such a huge success now. As an example, please take a look at this small one in the Seattle area: http://www.foodcaching.com/business. They are exclusively focused on restaurants because it is clear by now that Groupon and Groupon’s clones do not work for this industry. To pove that I would like to share the link to the Rice University Business School study that you mentioned in the article. If you read it more carefully you will notice that customer dissat with Groupon and clones in the Restaurant business is 92% with only 8% willing to do a Groupon again. This is the worst number of the study group and proves the point that Groupon simply doesn’t work for high fixed cost merchants. There is also a Harvard Business School study now that comes to the same results. I am not sure what data you were referring to when you say that customer dissat was just “slightly higher”. Here is the full document for everyone to review:
http://www.ruf.rice.edu/~dholakia/Groupo n%20Effectiveness%20Study,%20Sep%2028%20 2010.pdf

Posted by SusanSti | Report as abusive

Your example is flawed because you’re assuming that every Grupon is a new client. Many of the people buying the Giorgio Groupon probably eat there all the time. For those people, the coupon is just a transfer of $15 from Giorgio to their pocket (and another $7.50 to Groupon).

To understand the economics you have to know who’s a marginal client (new business, additional purchases) versus an inframarginal client (someone who would have gotten it anyway).

I think there are a lot of businesses out there who do a Groupon and then see the same clients come in paying 25% of what they did the week before…

At Giorgio’s, for instance, diners paid $15 for their Groupon — which gave them $30 of food. But dinner for two at Giorgio’s, with some kind of alcohol, can easily run to $100 or more. So even after knocking $22.50 off the bill (remember that Giorgio’s kept $7.50 of the proceeds of the Groupon), the restaurant would often still make money.

Posted by adamoneill933 | Report as abusive

I provide marketing services for over 50 restaurants and all my clients have worked with Groupon. I have a lot of data regarding Groupon’s service and the value that they provide.

Our experience has shown that Groupon doesn’t offer any significant benefit unless the restaurant is severe financial difficulty or if it does not have any online marketing presence ( no website, no facebook…)

According to our clients:

1. The majority of Groupon customers won’t spend more than their coupon.

2. Groupon Customers are not loyal and generally don’t come back.

3. None of our clients have profited from Groupon deals and have in fact lost money.

According to our analytics reports:

1. The day that Groupon starts selling an offer for one of our restaurants, we get at least 5,000 click on that day ( the average restaurant gets 3,000 clicks a month). However, the following days show few or no extra clicks or our traffic won’t increase a lit bit.

2. Our clients receive few or no extra fans on Facebook and Twitter, or indeed on any social media channel they we are using.

3. Groupon customers don’t spend more than 20 secconds on a website. Restaurant customers spend 1:30 min on average, showing that Groupon customers are more interested in the coupon than the restaurant.

At best, Groupon is only a short term solution. Groupon attracts a group of customers that don’t spend money and are not loyal… Restaurants give away 75% discounts and receive little in return . Groupon won’t survive in the restaurant industry if they don’t add any value to restaurants.

My colleague also wrote this article called “Groupon, Restaurant Friend or Foe?”
http://www.gourmetmarketing.net/2010/11/ 01/groupon-restaurant-friend-or-foe/, I’ll recommend you to check it out.

Posted by onurkiyak | Report as abusive

I provide marketing services for over 50 restaurants and all my clients have worked with Groupon. I have a lot of data regarding Groupon’s service and the value that they provide.

Our experience has shown that Groupon doesn’t offer any significant benefit unless the restaurant is severe financial difficulty or if it does not have any online marketing presence ( no website, no facebook…)

According to our clients:

1. The majority of Groupon customers won’t spend more than their coupon.

2. Groupon Customers are not loyal and generally don’t come back.

3. None of our clients have profited from Groupon deals and have in fact lost money.

According to our analytics reports:

1. The day that Groupon starts selling an offer for one of our restaurants, we get at least 5,000 click on that day ( the average restaurant gets 3,000 clicks a month). However, the following days show few or no extra clicks or our traffic won’t increase a lit bit.

2. Our clients receive few or no extra fans on Facebook and Twitter, or indeed on any social media channel they we are using.

3. Groupon customers don’t spend more than 20 secconds on a website. Restaurant customers spend 1:30 min on average, showing that Groupon customers are more interested in the coupon than the restaurant.

At best, Groupon is only a short term solution. Groupon attracts a group of customers that don’t spend money and are not loyal… Restaurants give away 75% discounts and receive little in return . Groupon won’t survive in the restaurant industry if they don’t add any value to restaurants.

My colleague also wrote this article called “Groupon, Restaurant Friend or Foe?”
http://www.gourmetmarketing.net/2010/11/ 01/groupon-restaurant-friend-or-foe/, I’ll recommend you to check it out.

Posted by onurkiyak | Report as abusive

I had a discussion about Groupon and its future with a couple of MBA classmates. From my experience as a merchant who attempted to negotiate with Groupon for my catering and frozen foods business in Taiwan http://www.88kbbq.com, I can say this model just isn’t good for most retail businesses. Here’s why.

Businesses selling services with a perceived value relatively unrelated to variable costs stand to do well. Spas, hot air balloon rides, concert tickets, etc. can profit from Groupons more than retail businesses. For products like ribs, brisket, hot links, etc., price is determined more by cost, and I don’t know of any reputable food service business making over 75% profit, which is what one would need to break even with a Groupon. On the other hand, a half-price ticket for a seat at a football stadium has a near-zero marginal cost, because the seat is there whether it’s occupied or not.

After holding out for a month, I successfully negotiated down to a 80/20 split, but in the end I backed out. I agree with tiger4 and even made a bet that Groupon would near end-of-life in 3 to 5 years based on their strict rules and growing disrepute among merchants. As people figure out that offering a Groupon is basically revealing their profit margins to customers and competitors, fewer merchants will participate.

And to correct Felix, Groupon does not pay up front, they pay as Groupons are redeemed. And expired Groupons are refunded upon request by the customer.

For Groupon to improve, they need to get more creative. I was going to lose so much money, I asked if I could just offer FREE ribs to customers who signing up on my site. Of course not. And there was no way for me to offer an all-you-can-drink beer Groupon with the purchase of a meal or something like that. Groupon isn’t for me, but it doesn’t mean it won’t work for other businesses.

Posted by kwoolf | Report as abusive

As noted in your post Groupon is a beneficial model to some businesses and for others can have a negative impact. A friend of mine owns a high-end salon and tried Groupon to attract new customers. She ended up with a large number of new one-time customers which resulted in her salon losing money. In addition to losing money the perceived value of her services minimized because she had offered her them at large discount. It’d be interesting to see a breakdown of what businesses have had the most success with the Groupon model.

Posted by AdrianaH | Report as abusive

Groupon has a great business model for the person who made it. After having over 5 years of experience marketing for the hospitality industry, I have found out that groupon is great to bring in new people to your business. However, it seems like they just use the coupon at your venue then run to the next best deal. This is really not a great deal for businesses because they do not gain loyal customers, they just gain the votes of people who like great deals.

Sweta Patel
http://socialmediaeatery.com

Posted by misswetapatel | Report as abusive

Groupon has a great business model for the person who made it. After having over 5 years of experience marketing for the hospitality industry, I have found out that groupon is great to bring in new people to your business. However, it seems like they just use the coupon at your venue then run to the next best deal. This is really not a great deal for businesses because they do not gain loyal customers, they just gain the votes of people who like great deals.

Sweta Patel
http://socialmediaeatery.com

Posted by misswetapatel | Report as abusive

Real-world experience and data tells a different story about Groupon. In fact, restaurants are the most likely to be burned by Groupon. The mainstream media has only seemed to endorse Groupon without considering the consequences, both intended and unintended, for businesses. I appreciate your interest in the matter. Still, many of your ideas strike me as similar to the erroneous assumptions that have been perpetuated in the Groupon craze (who would expect the fastest growing business of all time would be fueled by some degree of hype?). I handle it at length in a piece soon to appear on the Gourmet Marketing Blog, addressing many of your points. I hope you read it.
http://www.gourmetmarketing.net/blog/

Posted by msun | Report as abusive

dot com bubble # 2 coming soon… :)

Posted by robb1 | Report as abusive

We took an actual Groupon deal from a restaurant and did some numbers, you might find it interesting:

The Mathematics Behind Groupon
http://statspotting.com/2010/11/the-math ematics-behind-groupon/

Posted by StatSpotting | Report as abusive

Here is how Groupon (and countless knockoffs) works across the ocean from NYC.

First, you get the same deals wherever you are in a city with a population of 4.5 mn. Nowhere near hyper-targeted.

Second, the deal is typically valid as soon as 3-5 coupons have been purchased, and often just one is enough. Nowhere near hundreds of new customers.

Third, restaurants tried the $15-buys-you-$30-worth-of-food model for a while and apparently failed to benefit: deals where it is unclear how much you are going to spend in the end don’t seem to work. Some eateries still use Groupon and the like, but now they tend to offer predefined menus. Buy a groupon for 15 bucks, print it out, come over, and we’ll serve a Ceasar salad, a pasta dish and a glass of red wine, period.

Fourth, every morning you wake up to a dozen emails from Groupon & Co, each with a bunch of deals, most of them for the same kinds of products/services, so there’s no sense of urgency at all. If you haven’t purchased magic restorative hair treatment, 70% off, today, you can be fairly sure somebody else will be offering miraculous revitalizing hair treatment, 75% off, within a few days at the latest.

Fifth, you never become a repeat customer as a result of buying a coupon. When stakes are high (say, health is involved), you don’t buy a coupon in the first place, and when they are low, you simply buy another coupon from whoever is offering one when you need/want the service again. Besides, comparison plays against the merchants: discounted prices provide a context in which regular prices are perceived as unjustifiably high.

And sixth, you most certainly do not recommend your “discoveries” to anyone. Coupons are only ever purchased for commodities that are roughly the same everywhere; once there’s no longer a discount, there’s nothing special about the merchant. Places where you get truly exceptional experiences do not offer coupons, if for no other reason, then to protect the perceived brand value.

Posted by NikkiV | Report as abusive

Many businesses who use Groupon are searching for magic bullets where none exist. Many steal from their own customers who would have shopped there in a month or more to buy the “deal” and several for their friends. That is the power of LivingSocial and Groupon in that the customers already know the brand well enough to know what a good “deal” it is. Those who don’t experience a commoditized brand, spa, house cleaning service, restaurant, etc who expect to be treated like full price high profit customers which they aren’t. If you are toying with giving away thousands of dollars in your profits I suggest you read Groupon: Why Deep Discounts are Bad for Business http://www.retaildoc.com/store/groupon-r eview-discount-business-model-livingsoci al/

Posted by theRetailDoctor | Report as abusive

I don’t think the valuation is really about what Groupon provides to people now. It is about people’s expectations of what Groupon will do with all its future users and a ton of data on their local spending habits.

Posted by levinsontodd | Report as abusive

Ich mag dieses Artikels, sind besonders gut.
Prada taschen

chanel Cambon

Posted by Daliena | Report as abusive
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