Sunday, September 25, 2011

Has Groupon A Future ?

Groupon has been the last couple of months the hypest story in the Internet business. Groupon has emerged as a new business model emerged from the web, and has experienced a great growth at a high pace.

In 2010, Groupon has generated $644 million, and the number of users has skyrocketed. What I have always been impressed by with Groupon, was there ability at a very early stage to generate revenues, whereas most of the Web 2.0 actors are focusing on growing their audience than finding an actual business model.

As an evidence of its success, Groupon has seen a lot of copycats blossoming in the different countries where it settled.

Groupon ambitions to go on the stock exchange market soon, but bad news came up, as its audience seems to be decreasing since June.

Even worst, Forrester forecasts that by 2016 daily deal market will be miscellaneous.

"Standing out above the clutter [will become] harder for marketers as ad exposures grow," Forrester analyst Shar VanBoskirk explained in a report released last week."Consumers will grow so conditioned to micro-impulse offers they'll lose practice at considered decisions ... Facing a cultural descent into maladroit judgment, employers (and spouses) will blacklist impulse deals to keep people intentional," he noted.

Moreover, it seems that its operating costs are growing faster than its sales.

Here are some thoughts I have:
- In July and August, it is normal that the audience decrease as people go on vacations. Nevertheless, Groupon is still a start up, and despite a decrease in the pace, they should still grow.
- Groupon is probably hurt by its problems of executions. Countless of articles have been written because they oversell their deals. If execution is not there, even though the offer is good it can’t work.
- What is funny is that as a matter of fact, Groupon is not so much an innovation. There were already websites with coupons, they just added the possibility to get great coupons by the large number of people going on the website.

Does Groupon really have a future? I think it will, but its future may not be as bright as people expected. I believe they should focus on their operation and execution, in order to reach profitability. The good point about the story is that they are already able to generate comfortable revenues, whereas other websites of the web 2.0 sphere did not.