Thread: - Think Groupon's Stupid Now? -

Originally Posted by Rex

FB is going to kill Groupon.

Agree. And if google starts their own venture as well, it's going to get interesting.

Originally Posted by lifeoftheparty.

I think you guys are all blind.

While I agree Facebook and Google are the CLEAR competition and could take a HUGE cut out of the market (FB more than Google) you don't think Groupon has thought of this? Groupon has BOOMED in their short time and are extremely smart.

They both SUCK at offline business. This is where Groupon thrives. Over 3000 employees, most in sales. Right after Groupon turned down Google (think about that, Google wanted to acquire them for a reason) they bought the biggest player in South America and Europe.

Facebook has a shot to really take things to the next level, for sure. But Groupon has a few tricks up their sleeves with different userbases like media empires and now has Groupon stores.

It's an interesting space, but you can't just say oh Facebook will execute better. I doubt it. Their success will be in the userbase. But they have a fierce competitor in Groupon.

You're missing the message. When you move on from academia into the full-time business world, no doubt you'll get a better understanding of the dynamics of building a revenue model that is sustainable for the long-term even with intense competition at both ends of the spectrum.

Groupon executes well in a marketplace where the userbase has zero loyalty. You will most likely never run into a person who will say "I won't buy a deal unless it's from Groupon". So we know that Groupon is forever having to chase the next deal to continue to remain relevant to consumers.

On the flip side, there are few businesses that would ever choose to only do business with Groupon, no matter how much cheaper LivingSocial/Facebook/Google/etc. might be than Groupon. Not every business wants an unlimited number of deals to be sold. As the phenomenon of daily deals subsides into something more mainstream, small businesses have gotten savvier with understanding the implications of teaming up with a daily deal provider. Less and less are interested in selling as many units as possible, as oftentimes the logistics involved in dealing with a crush of customers overwhelm the smaller businesses. If my goal is to sell 500 or 1000 deals, and knowing that studies have repeatedly shown that no daily deals userbase is any more likely to bring me a net new customer willing to pay full price on repeat visits for goods/services than another, then it only makes financial sense for me to work with a provider that takes as small of a cut as possible.

Just b/c Groupon has a ton of feet on the street doesn't give it a huge advantage over the big online players. As time passes and business owners get more savvy with the daily deals industry, the need for a personal sales rep decreases. At its core, a daily deal isn't rocket science for a business owner. Figure out how much of a discount for how much value of goods/services you want to offer, agree to how much of a cut the provider gets, provider advertises the deal for X amount of hours/days, get a check from the provider. A daily deal has become a commodity, and Groupon's premium for their offering is going to disappear here shortly. If a transaction as complex as buying/selling a home or getting a loan can be done entirely online, how does signing up to offer a daily deal require the need for human intervention?

What really will have Groupon in a tough position is that the big national enterprises that would consider a daily deal in lieu of a standard marketing/advertising campaign are going to be attracted to the Facebook and Google level competitors first. It's simply a matter of better bang for the buck. If a soda company wants to advertise the launch of a new product, would you want to tap into the largest userbases or the smaller ones? Groupon definitely can't charge a premium over a competitor that offers a sizably larger scale of potential consumers for the campaign.

Circling back to my initial point that "you're missing the message" - - - I don't think anyone truly believes that Groupon will wither away as the level of competition increases. The points being made were to the original premise of this thread - - was Groupon smart to turn down the rumored $8B final offer from Google? If you still feel that Groupon will be able to support an 11-figure valuation for the long-term, you're in the minority.

Originally Posted by Rex

FB is going to kill Groupon.

just like they killed FourSquare?


the problem w/ Google/FB/Yahoo/whoever killing them is that it's not their core competency. it won't get the proper resources it needs to take out Groupon - guaranteed.

i mean, wasn't Yahoo supposed to take out Google? wasn't Google supposed to take out FB? wasn't FB supposed to take out Twitter?

you only own one spot in a consumer's mind. Google/FB will have ok coupon businesses, possibly a few hundred million/year, but it will just be another business unit that will be expected to just notch x% gains each year to survive. have seen it a million times in my previous life.

- chuck

Originally Posted by carendt242

just like they killed FourSquare?


the problem w/ Google/FB/Yahoo/whoever killing them is that it's not their core competency. it won't get the proper resources it needs to take out Groupon - guaranteed.

i mean, wasn't Yahoo supposed to take out Google? wasn't Google supposed to take out FB? wasn't FB supposed to take out Twitter?

you only own one spot in a consumer's mind. Google/FB will have ok coupon businesses, possibly a few hundred million/year, but it will just be another business unit that will be expected to just notch x% gains each year to survive. have seen it a million times in my previous life.

- chuck

good points but foursqaure is fading

Originally Posted by miabullitt

good points but foursqaure is fading

i don't know where you get your numbers for that - even if true - it's *not* b/c of FB. if you're basing your statement on compete.com, well, ....

the major metrics services do not include mobile numbers in their traffic stats - so any declining traffic, based on their web site, is not an accurate measurement of the usage of their overall service.


- chuck

Originally Posted by carendt242

you only own one spot in a consumer's mind. Google/FB will have ok coupon businesses, possibly a few hundred million/year, but it will just be another business unit that will be expected to just notch x% gains each year to survive. have seen it a million times in my previous life.

- chuck

Huh? We're talking about a consumer that's looking for a deal/bargain. There's no loyalty there. The only loyalty is to the current deal. I've outlined above how it will be increasingly difficult for Groupon to land these deals without reducing their profit margins.

As for the bigger boys treating the daily deal industry as just another business unit, I can attest that Facebook is not viewing this as a throwaway campaign (I say that from the perspective of someone whose company does a solid 8-figure revenue number annually as a supplier to Facebook). If FB were bringing in $10B a year in revenue, then a $1B bump is nice but not earth-shattering. But when FB would likely be popping a lakeful of expensive champagne if they did $3B in revenue in 2011, a $1B bump to the bottom line would be huge (especially pre-IPO). I don't see any of the big players willing to settle for a few hundred million annually if Groupon were seeing significant annual bumps from their projected current $1B+ annual revenue.

Originally Posted by fusionstorm

You're missing the message.

Heyo, I don't get the burn on me being a student! lol. Trust me I'd rather be working!

Totally agree RE: loyalty, and I get that. They have zero customer acquisition costs which is huge and they have 500 million potential customers. They are clearly set to succeed in this space.

Regardless, time will tell I guess. I think they were likely preparing for this and I still see them ramping up.

They just move faster and like chuck said this isn't their business. It's actually a fair stretch and I think that's why Google wanted them so bad.

Originally Posted by fusionstorm

Huh? We're talking about a consumer that's looking for a deal/bargain. There's no loyalty there. The only loyalty is to the current deal. I've outlined above how it will be increasingly difficult for Groupon to land these deals without reducing their profit margins.

As for the bigger boys treating the daily deal industry as just another business unit, I can attest that Facebook is not viewing this as a throwaway campaign (I say that from the perspective of someone whose company does a solid 8-figure revenue number annually as a supplier to Facebook). If FB were bringing in $10B a year in revenue, then a $1B bump is nice but not earth-shattering. But when FB would likely be popping a lakeful of expensive champagne if they did $3B in revenue in 2011, a $1B bump to the bottom line would be huge (especially pre-IPO). I don't see any of the big players willing to settle for a few hundred million annually if Groupon were seeing significant annual bumps from their projected current $1B+ annual revenue.

we will have to wait & see who is right. i don't buy the argument that "FB will kill them" just b/c "they have 500MM users."


i won't disagree the loyalty is the deal - but people have too many messages hitting them every day - so there is loyalty to a reliable stream of good deals - a curator so to speak. do you read all of your emails every day? i read about 20% at best.

groupon has created a scalable salesforce for these types of deals - that's why they're winning right now. Google will *never* put a salesforce like this on the ground - it goes against every bone in their bodies - and FB has largely the same mentality.

mobile is still the huge opportunity - walking around, getting pings about deals, and then there's the merchant side - demand management - offering great deals when demand is lowest.


we'll see. i would expect Google to buy Living Social before building their own if, for nothing else, than the sake of their balance sheet & stock price (amortizing instead of hitting cash flow)

- chuck

Originally Posted by lifeoftheparty.

Heyo, I don't get the burn on me being a student! lol. Trust me I'd rather be working!

Totally agree RE: loyalty, and I get that. They have zero customer acquisition costs which is huge and they have 500 million potential customers. They are clearly set to succeed in this space.

Regardless, time will tell I guess. I think they were likely preparing for this and I still see them ramping up.

They just move faster and like chuck said this isn't their business. It's actually a fair stretch and I think that's why Google wanted them so bad.

No ill intent was meant with the student versus professional remark. I bring that up b/c I know A LOT more about business (especially sales, client relationships and loyalty, having been in the midst of the game for over a decade) now as compared to when I was an impressionable late teen to early 20-something getting my education at Cal Berkeley. That my income is directly tied to my ability to maintain some semblance of a profit margin of whatever I sell also gives me a slightly more aware look at the topic at hand than most, IMO.

Groupon should be doing everything it can to go public ASAP. The competitive field, ability to increase revenue and to maintain their profit margins are going to be much tougher for them if we were to revisit this topic a couple years from now. There are not enough dollars out there for all the players that are coming in to the industry, and while Groupon is probably in the best position of the incumbents, their position is nowhere near entrenched based on the dynamics of both sides of the marketplace.........

Originally Posted by lifeoftheparty.

Think Groupon's Stupid Now?

Yes. Any other questions?