back to article Groupon splurges $260m on Korean deals firm as cash bleed continues

Groupon has announced that it will be buying Ticket Monster, the Korean firm owned by its daily deals rival Living Social, as it reports another quarterly loss. The voucher bazaar said it would pay $260m in cash and stocks for the company, which offers a "broad range of product, local and travel offers". Groupon added that the …

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Kudos to Google.

My email feed has been much cleaner since they started filtering out all the marketing crap for me.

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Oh is Groupon still going ? Thought they died a while back when the market for fish pedicures and eyelash extensions dried up.

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The Groupon model

1) Find a sap small business

2) Promise loads of new clients

3) Insist offer must be 50%+ discount

4) Take 50% of the voucher price

5) Small business overwhelmed by stingy new clients with no loyalty, upsell or value

6) Small business worse off than before, with loads of new complaints

7) Repeat

What shocks me most is that Groupon manage to make so little money on this parasitic model!

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Re: The Groupon model

What shocks me most is that Groupon manage to make so little money on this parasitic model!

It has high acquisition costs - it generally requires real people to go out to those small businesses to setup the deals. And, as companies keep on getting burned by the experience it keeps on doing the same thing.

The key flaw in the business model, as your rightly point out, is that it is parasitic, ie. businesses suffer over time from it. I think there is some underlying sense in trying to improve yields of capacity but think this is limited to services with low customer retention such as restaurants, hotels and taxis. So, services like opentable, the endless hotel services and the new taxi services are likely to do well. But they will do so by improving the yield, which benefits both customer and service provider, and not by promising unsustainable discounts.

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Tarnished image

Starting this summer I've noticed more and more people associating Groupon offers with poor quality from desperate or shady companies. So far this is merely anecdotal and probably due as much to knowing fussy people as anything else.

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Re: Tarnished image

There are plenty of companies that seem to spring up on a Monday, list massive discounts off of inflated RRPs by Wednesday, deliver by Wednesday week and are gone again by the following month. As opposed to real businesses offering a discount from real prices, the value of the discounted items is still considerably lower than the landed price of the container full of tat.

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Re: Tarnished image

Anytime companies are offering deep discounts (and in this case paying a 3rd party for the privilege) it is for one of two reasons: Either their model is cash flow based and as long any cash keeps coming in their expenses are manageable (hotels and brand name fast food for example), or they are desperate and have made fundamental errors in the operation of their business.

It is that second group where you're going to run into shady problems and tons of stack on fees and caveats. If all is going well with a business offering a sale or discount is dumb unless it's an inventory/tax management issue. If you only get the customer because of price they probably aren't worth having as they won't come back for regular priced goods and if you've broken even on the one deal you do land you're lucky.

Groupon survives on the hopes of the desperate. I'm really surprised they've lasted this long.

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