Voucher bazaar Groupon managed to bag a profit for the first time ever in the second quarter of this year - but it wasn't enough to convince investors it's a good place to leave their money. The coupon company's revenue missed analysts' expectations, sending shares sliding down more than 18 per cent in after-hours trading. …
"Groupon blamed Europe's weak economy and currency fluctuations for its less-than-impressive results"
So not that their business model is offering people money off stuff they didn't want in the first place, then. Well they would say that.
I must admit, I thought the bottom had fallen out of the fish foot spa market so well done for actually making some money!
Ah. Google tells me that a "fish foot spa" is less WTF? and more OMFG!
Fools and their money
They demand significant discounts from retailers and demand high commissions - however, new entrants often find they get brand presence quite quickly and they get to keep the client contact details for spamming (apologies, marketing to) in the future.
If you buy a Groupon voucher and don't use it (they expire) then Groupon keep the money, not the retailer who provides the service. I reckon they made a lot of their profits this way.
Re: Fools and their money
50% discount = £10 paid by customer
50/50 split between groupon and merchant
Merchant gets £5
Pretty brutal, only really viable for stuff that is either way over priced in the first place or retailers willing to handout 'freebies' for advertising.
Re: Fools and their money
Indeed, the advertising value of Groupon promotions is pretty poor as well - Groupon customers have, pretty much by definition, no loyalty to a supplier, and will go with the next poor sap to make a loss on their services in exchange for 'advertising'. Groupon's reps tend to downplay this element.
Two problems with Groupon for me
I can see two problems with Groupon's model. The first is consistently attracting enough tempting offers. Most of my Groupon emails for the last week have advertised colonic irrigation in the subject line. How much of a market is there for this, seriously? It also doesn't entice you to click on the email and see what else might be inside! More often than not I now just delete the eleventeen emails a day they send me unopened.
The second is repeat business from those providing the offers. There have been some high profile cases where Groupon has sold their voucher deals to businesses they really aren't suited for. I remember someone who ran a professional oven cleaning business complaining they got no repeat business. How often do you need your oven professionally cleaned? Groupon risk alienating small businesses by blindly targeting sales at any firm who'll have them.
Re: Two problems with Groupon for me
I think you've inadvertently hit the nail on the head: the groups that Groupon are targeting are organised around the offers rather than common interests. I know a few people who are "into" the whole thing but it doesn't seem to be creating the desired networks. Anecdotally I have heard from some people that it seems a good way to kick start a business even of the less esoteric kind, but I can't help thinking that tapping into pre-existing groups with a more standard rebate scheme would be better. You can just see how Google's Circle's are predestined for this and at much lower commissions.
Of course, Groupon's business model is almost diametrically opposed to the business it is pretending to serve: they cannot be interested in continually buying new customers (at the expense of existing ones).
I managed to pick up a good deal on there the other day, but on the whole it is the same stuff week in week out.
Or better yet !
Accounting Fraud !
Let's not forget about dilution
Also, like any half baked idea, everyone is trying to start their own coupon service. Groupon should have sold out to Google when they backed the Brink's truck up to their door in 2010.
Is this Groupon's definition of profit or the rest of the world's definition of profit?
I seem to recall reading that their favourite accounting metric was EBITDAAAEWDWTI - Earnings before interest, tax, depreciation, amortisation and anything else we don't want to include.