Twitter Updates

    follow me on Twitter

    « Find Link and Leverage Opportunities | Main | Is Amazon Finally Getting Into The Online Ad Market? »

    Comments

    Chris Treadaway

    Just now catching this post -- interesting thoughts. But I think you're giving Groupon too much credit for adapting their business model in the future for the next evolution. A lot of companies fail to innovate when they are forced to choose between the old business model and the new one.

    And there is no evidence they are more than a one-trick pony. Heck, it took Google almost a decade to figure out a 2nd business model (Android) that they are just now using to their benefit.

    Sure, Groupon has done some good things, but my hunch is that all they've really done is awoken SMBs to what is possible.

    There are too many uninteresting deals from acupuncturists and massage therapists now due to competition, weaknesses in the business model, etc.

    Chris

    Adam Rachwal

    Everyone keeps propagating the $6billion Google offer which in my opinion was not different from the following: "Times Square Screen Hack - looked amazingly real to me when I saw it the moment it came on twitter only to find out the next day that it was a viral marketing campaign to promote a movie" This Google offer was in my opinion a great way to go viral for Groupon without any essence. I don't disagree that Groupon came up with a great idea of making it simple for small local businesses to advertise online to a mass local market - ONCE. I published a free local newspaper for over two years with local business advertising supporting it, I know a tiny bit about this business. For Groupon that ONCE is enough because the huge number of local markets in North America with a huge number of small local businesses is just that - HUGE. Therefore, even getting them to advertise once is plenty of cash - instant cash, the best cash flow you want especially when you want to attract Wall Street attention.

    Matt Hulett

    @Tom Clarke - I disagree. I would be interested in looking at more data. This article(http://blogs.pitch.com/fatcity/2010/10/do_restaurants_get_a_good_deal.php) sites a study that shows
    66 percent of the businesses surveyed; however more than 40 percent indicated that they would not run such a promotion again. Clearly, it is going to depend on the category (spa's v. restaurants). Another factor is redemption rate. This article
    plots redemption rate over time. Post on that is here: http://blog.yipit.com/2010/08/19/slides-the-explosion-of-group-buying/ . Clearly, the merchant wins by category for the revenue upside of breakage. Its not like merchants will build businesses on breakage. I continue to believe that you can't look at daily deals as being an unsuccessful science project. Just like my travel example, we found periods of time where hoteliers needed heads in beds and they were willing to pay 4x the normal commission rates to get those travelers.

    Tom Clarke

    Wrong - The model is faulty - The bottom line: the local merchant CANNOT sustain a 75% discount - Spas, yoga, skydiving and other can but how many customers are going to buy over and over the same type of coupon?

    Rob Solomon

    Leave it to Matt Hulett to offer a very insightful understanding of the potential opportunity. Matt gets it and is one of the best minds in startupdom.

    The comments to this entry are closed.