Pretend you are a small business owner and you are sitting in your place of business on a Monday morning with a cup of Joe. You ask yourself "How do I boost sales?", "How do I reach those customers that don't even know my company exists?". Enter Andrew Mason, CEO of Groupon (you can assume it's not your typical Monday morning). He would tell you about Groupon and how there is no other service that has been shown to boost small business sales and awareness like this one. With his history of being one of the fastest companies to make their first billion you might just go for it, but will it really be profitable for your company?
The way Groupon works is through a subscription service. Members of the Groupon community receive daily emails showcasing that day's deal. Whether it be a massage, dinner and drinks, group fitness classes or tickets to shows, all deals are offered at a radical discounted rate. The catch you ask? You don't get the deal unless a certain amount of people buy the deal. With 6.5 million members you might not have to worry too much, but to a small business this might sound like a bit of a gamble. Check out this video on Groupon!
My take on Groupon is that it really does work. Of course you will have those people that come into your business one time, show you their Groupon deal and walk out pleased with the fact they paid no where near what you really charge, BUT you will also get the customers that will keep on coming back. And with those customers comes positive word of mouth, which we all know is the best form of marketing. Small businesses and Groupon have a harmonious relationship and one can see that when they look at Groupon's profits.
We all know that with Internet success comes interested buyers, enter Google. Concerns about Google buying Groupon range from the concern of lack of consideration of Groupon's worth to the concern it might lose a bit of that exclusive feel. Although Groupon has millions of users there is still a special feeling when you log on and "discover" the deal for the day. Would Groupon be "selling out"? With the brand of Google backing Groupon it might be exactly what they need to launch into the next level.
Groupon continues to expand their profits by offering small businesses a solution to limited reach and low purchase frequency. The discovery of small businesses in your city is just a click away, have you checked your deal today?
Reference Article:
http://www.forbes.com/forbes/2010/0830/entrepreneurs-groupon-facebook-twitter-next-web-phenom.html
Linked!
http://e-marketingforsensiblefolk.blogspot.com/2010/11/blog-post_30.html
I agree with your post on Groupon and the fact that it works. In this economy we are in today, consumers jump on anything that has the term "discount" encoded in it. Groupon has not only helped consumers but also aided smaller businesses reach a successful standpoint by offering various discounts to the online market residing in the local area.
ReplyDeleteOn the Google aspect, I believe Groupon should give in to the Google purchase as it will help increase the company's popularity. Google is the #1 online advertising company and this type of support will give Groupon the push it needs to take over the online coupon sales market. Although this merger might seem successful for both companies, it might also hurt the online market if Google acquires ANOTHER online company.
Overall, I believe Groupon is a great company especially during this economy and I see a great future ahead for the 2 years young company.
link: http://www.marketwatch.com/story/groupon-reportedly-spurns-google-merger-2010-12-04
Michelle, This is a very interesting post. In the end, Groupon did not ‘sell out’ and turned down a reported $6 billion dollar offer from Google! I agree with you that Groupon’s certainly offers local and small businesses an affordable marketing outlet. I’m curious though, how quickly and easily will Groupon will be able to scale to the local markets. I was surprised to see that the company is already in medium size cities across America, including my Hometown of Green Bay, Wisconsin! However, in order to reach business and customers in Smalltown, USA, Groupon will have to hire a salesforce to serve that market in order to secure and vet potential customers (just to make sure that the local ‘toy store’ is what you’d think it would be, for example). In a way, Google already had this covered as most businesses, all around the world, have listings on Google Maps. Perhaps Groupon will reach its critical mass at the medium-large city market. Just a thought, thanks for posting!
ReplyDelete@Michelle, I disagree that Groupon really has the potential to serve local and small businesses. The whole point of the group-buying website is that businesses need to sell enough coupons to make it worth the businesses' and Groupon's while In a small business scenario, it is unlikely that enough customers will buy the daily deal.
ReplyDelete@ Yemi, I agree that Groupon was mistaken to have walked away from this offer