Groupon Management Left Groping for Answers
Here’s the deal. Consumers are not going for Groupon’s daily deals in the types of numbers to make investors happy.
A Wall Street Journal piece pointed out that while Groupon Goods — items inventoried by the company and sold directly to consumers from the site — accounted for 12 percent of revenues during its second quarter, the core coupon business was down seven percent from the prior period.
Of course, not everyone saw Groupon’s last quarter in wholly negative terms despite the company’s stock selling around $6 a share.
"We had a solid quarter despite challenges in Europe and continued investment in technology and infrastructure," said Andrew Mason, CEO of Groupon, in a statement. "We’ve deepened our relationships with a growing base of merchants and customers worldwide, demonstrating progress as we work to unlock the opportunity in local commerce."
With the Goods initiative, a member rewards program and the opening of its first Groupon Shop in Singapore last month, the company is clearing looking to branch out beyond e-coupons.
Whether these initiatives or one or more yet to be introduced will take hold remains to be seen. One thing seems clear based on a present day snapshot. Groupon’s current value, as the Journal piece pointed out, is roughly half of what Google was offered for the company a couple years back. That’s one deal that Groupon probably wishes it could get back.
Discussion Questions
Discussion Questions: What is your take on the ability of sites such as Groupon, LivingSocial, etc. to help retailers drive business results? What will Groupon need to do if it is to ever realize the lofty expectations for the company from a couple of years back?
Algorithms. If Groupon is to realize the dream of driving business results, it needs to partner with social network sites, cellphone service providers, and email hosts, to “read” the conversation between and among people. Recently, I was asked to give consent for exactly this purpose. Scary as it may be, when alorithms read our human discussions, then Groupon-type offers can be put forward to likely buyers. It is only by truly embedding in human interactions that they’ll make real headway.
When offer-based programs are embedded into a retailer’s overall CRM and omnichannel marketing program, they can stand the test of time.
The problem with Groupon is that they try to stand alongside the retailers and require shoppers to engage with them as an individual platform.
The feeling of the stand-alone “offer platform” reminds me of the frenzied use of eBay for a period of time. They too had to stretch to find ways to be more ingrained with retail platforms, rather than just a stand-alone destination.
This is no surprise. Relying on the cooperation of local merchants to fuel their offers, a one and done result is to be expected. Why? Because the merchant isn’t engineered to leverage the traffic generated by identifying and then bringing that 50% off customer back for a 2nd visit.
With a heavy reliance on outbound sales solicitation to sign merchants up, the couponing sites will sustain relevancy to those who like to get a great deal and be willing to sample stores/services in undifferentiated categories.
Groupon’s effort to launch a loyalty program was a smart move — it addresses one primary weakness and that is repeat business. Extending the service’s value proposition beyond discounting is the only way these business models will exist 5 years from now. In today’s economy smart shoppers with easy access to the site from their smartphone will continue to take advantage of targeted offers. But, the troubling aspect is seen in how the concept can be replicated by others – newspapers, directories and traditional coupon distributors. This lessens the exclusivity of the service and puts into question their long-term survival.
Unfortunately, Groupon has reached an annoying saturation level. I used to faithfully open their emails daily. Now I am very, very selective when I read their emails and what I purchase, if anything.
The thrill has definitely worn off.
Groupon will rue the day it turned down the acquisition offer…it probably already does.
Nearly every local newspaper in the country now offers Groupon-like deals. No special sauce is required. It’s tough to imagine how Groupon gets its mojo back in an environment like this.
“What will Groupon need to do if it is to ever realize the lofty expectations for the company from a couple of years back?”
It can’t do anything; the expectations were a fantasy.