

Under the hood, Groupon is declining in Boston - rocksy
http://bostinnovation.com/2011/06/03/groupon-ipo-boston-yipit-decline/

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Cherian_Abraham
I cant see their costs coming down anytime soon. Their customer acquisition
costs are $1.43 for every $1 spent. And now, with "Real time groupons"
launched in Chicago, imagine the amount of deals they will have to line up
that would require for them to keep me interested. I dont deny that they are
attacking a problem that I do have - "Where should I go out to eat tonight?"
and target me with real time deals based on where I am now. But in order to
seed enough deals, they have an uphill task on lining up enough businesses (on
top of the 50k they currently have) and enough deals. Even with the several
thousand sales folks they currently have, its a gargantuan task. I want them
to succeed, but I think they bit off too much.

~~~
r00fus
The sad thing is that with Google's backing, they would have had immense
resources to eat FourSquare, LivingSocial, and Facebook's lunch for these kind
of local advertisements.

To me, Groupon's leadership were idiots for passing up the Google $6B
buyout... and it will be readily apparent to everyone in a few months.

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adam
I suspect this may be true, but if you're Groupon, you're not just sitting
around waiting for the daily deals business model to become more and more
saturated, you're hard at work on your "next thing" and your next "big thing."

Look already at the flash mob deals they're doing that are location based, the
deal they just struck with expedia, the deals with national brands they're
starting to do more of. Those are just derivatives of their core idea but also
all bring in serious cash.

But then there are things they're likely working on that will go beyond the
deal space and in to other services for the tens of thousands of businesses
they now have relationships with. Think cross-business loyalty cards, point of
sale systems, reservation systems, etc. If you think of a small business'
"stack," they're just at marketing right now with the deals stuff, but there's
no reason why they can't inject themselves further on down the business stack
successfully. Deals will always be a part of their business I suspect, but in
2-3 years not their core business model, just an accepted concept in a much
larger offering to businesses.

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edw
I think the Expedia-Groupon deal bodes very poorly for both companies. Expedia
is worried about their core business and is throwing money at Groupon (in the
form of subsidizing deals) in order to associate itself with a company that is
perceived by many to be up and coming. Groupon gets to look like it's
innovating, when all it's doing is taking money from the nerds for the ability
to hang out with the cool kids for a while.

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baggins
Lacking detail, but an interesting piece nonetheless. The novelty has probably
worn off, and if you can't get beyond things most people never buy, like spa
treatments and luxury items, then it's going to be tough to keep the momentum
going.

~~~
kmccarth
if you are looking for more detail, definitely read the entire case study
(link also in post): [http://blog.yipit.com/2011/06/03/groupon-s-1-reveals-
busines...](http://blog.yipit.com/2011/06/03/groupon-s-1-reveals-business-
model-deteriorating-in-oldest-markets/)

reader beware: the case study is a pain to read

~~~
vacanti
Why is it a pain to read? (Always trying to improve our writing)

~~~
kmccarth
Take this with a grain of salt (I am no skilled writer myself): I found the
organization to be fragmented. Instead of digesting one theme straight
through, I found myself having to refocus on each main point. Hope this helps
in any fashion

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espadagroup
Groupon is eventually going to have to end up creating a self serve product
for business' and send out a daily digest to subscribers of the relevant deals
in the area

~~~
waterside81
They already do. Groupon Stores allows businesses to create their own offers
that get approved and then scheduled by Groupon.

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Apocryphon
I like how the anti-bubble articles are now pinpointing the specific
weaknesses of the companies. Well, the stories following LI's IPO were more
about how the investors pumped up the value, than anything criticizing LI
itself. But yeah, are we due to see critiques of of any other high-profile
startups that are going public? Because I want to see what's wrong with
Pandora.

~~~
imjustatechguy
I strongly believed that LinkedIn was overvalued, but I didn't think it was a
basket case.

LinkedIn has loyal users, and it is moderately profitable. It just has to
figure out how to best monetize them.

LinkedIn has some potential if it can figure out an effective monetization
strategy. People keep coming back to LinkedIn without LinkedIn paying hugely
to attract them.

Groupon is highly vulnerable to competition and even now it is very not
profitable. Insiders are also cashing out to a huge degree.

I think Groupon is unique in its current position. It is in a much worse
position than LinkedIn in my opinion. LinkedIn is a viable business, although
it may not grow to be absolutely huge (although it might), but Groupon could
easily go to zero and quite quickly.

~~~
Apocryphon
So Groupon may be a MySpace that will be doomed by its Facebook, you mean.

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Hisoka
Having own mailing lists in the past, I can say this is most likely true.
Think about it - most deals Groupon sends are not of interest to you. Because
of that, you're gonna ignore more and more of their emails, and eventually
you're gonna stop opening those emails. The open rate of a Groupon email will
just keep decreasing, and as such as the value of a subscriber base is gonna
deteriorate.

~~~
jfernandez
It seems like they could benefit from offering better filters/subscription
methods to their members, e.g. I want to receive only restaurant deals as a
simple filter. Sure it'd decrease their overall coverage but it could help
retain the value of the emails sent... I think we've all gotten to that ignore
point with certain senders.

~~~
mitjak
Definitely. One can only stand so many spa and skin treatment discounts per
week. Then again, I wouldn't imagine hackers to be the main target group for
the majority of groupons.

~~~
Qz
I've heard that their main target group is young professional women, which
makes the spa/skin stuff a lot more sensible.

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arthurgibson
I'm confused at why the summary of a detailed case study gets upvoted. I think
pg needs to adjust voting again.

~~~
shii
Don't worry, anything that the hivemind likes for the moment will rocket up,
no matter how shitty. Groupon=sucks iz goood, no matter if it's worthless
meta.

