
Google’s Groupon Offer: $5.3 Billion, With $700 Million Earnout - nreece
http://kara.allthingsd.com/20101129/googles-groupon-offer-5-3-billion-with-700-million-earnout/?mod=tweet
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lionhearted
What am I missing here? Groupon: Solid brand, good copywriting, mailing list
of qualified buyers... okay, that's great stuff, but where's the defensible
advantage here?

Do they think customers will be loyal to Groupon when more specialized
competitors emerge? Do they think merchants will stay loyal to Groupon and
continue to pay a crazy cut?

Maybe Google picks up a lot of synergy value for their search and data-mining
and integration with other services, but they don't exactly have a great
history integrating acquired companies with their existing services.

What's the value they're buying in Groupon? I see a company making an
unsustainable cut of deals and no defensible advantages long term as
competitors emerge to copy their (easily copied) business. Someone enlighten
me - what am I missing here?

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retube
Rightly or wrongly, Groupon is a cash-cow. If they're making $50m/month, given
the profit margins (which must be high given that revs are 50% of inventory
value which they don't even have to buy/manage/warehouse/distribute!) $5bn
doesn't seem too bad. It's a solid multi-national brand with proven
scalability, and I'm guessing Google see plenty of more room to expand: given
that a large %age of the internet uses Google services, and given all that
Google know about their users, they can efficiently and accurately market to a
huge number of people. Plus that reach means they can easily defend against
competition.

So yeah, I reckon this is a pretty solid deal for them.

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fookyong
* which they don't even have to buy/manage/warehouse/distribute!)*

This really is key.

Coming from a traditional e-commerce background that includes all of the
above, I am quietly envious of the groupon business model. You don't really
understand until you've been in the industry, but the logistics aspect of
e-commerce really is a massive part of the process. That Groupon have managed
to circumvent that in a way that is profitable/scalable is quite an
achievement.

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ambitious
I think Andrew Mason and Co. will take the deal, if only because the payout is
so gargantuan for Groupon investors. They must REALLY want this to happen.

