Groupon is an online, mass discount website.It was founded in November 2008 by Andrew Mason. By October 2010, Groupon served more than 150 markets in North America and 100 markets in Europe, Asia and South America and had 35 million registered users. Then again in 2010-It was projected that the company made $1 billion in sales faster than any other business, ever.In 2011 this company was termed a disaster and an example of how fast an internet dealing can fail. It’s a daily deal site offering deals on everything you can see, or eat , or for the fitness,for your make up and for travel. How does Groupon market?
Groupon uses social networking for shopping.
It helps you shop by finding the lowest prices in a particular locality for anything you search .When you log on to the site let the others know where you are. You will be informed of the best deals in the area. You are sent the deals in the area. These deals can be shared with others on Groupon.With Groupon you can buy on your app directly you don’t need to log on the site. It is all about group shopping. What is the secret for success of Groupon?
Groupon’s model has been a success inspite of many ups and downs.The unique features that make it a success are: Crystal clear value proposition-Groupon’s goal is clear: help introduce people to your business. Each coupon on the site has a predetermined minimum. If not enough people sign up for the deal to take effect, neither Groupon nor the business makes any money. Groupon makes money by getting a cut of these promotions from the retailers. Groupon uses collective buying to create a win-win for local businesses and their customers. No wonder so many merchants are eager to participate. Built in virality for the product-Since each deal is only good for one day, it creates a sense of urgency for the users and make them feel excited. Obviously, users want to make sure the minimum is hit. What can they do? Tell their friends. Groupon takes that social component to the next level through Facebook Connect and Twitter, inviting a user’s entire network to get in on the deal. Their user acquisition costs? Zero.
Groupon also invested a lot resources on customer service, from our help line to quick online response to customer issues. So customers are happy and continue to help Groupon reach new heights. Alternative to Traditional Advertising for Local Businesses Its founder wants to treat Groupon as a city guide and help you get whatever deals you want from nay part of the city . He wants to help people have fun in the city and save money using the tremendous power of group buying. For local business owners, Groupon has become an alternative to traditional advertising, where they pay up front and hope for the best. In this new platform, these promotions are like a whole new form of local advertising, where merchants only have to pay for REAL result. Customers get fabulous deals on things that they always dreamt of buying but could not because they couldn’t afford it. Negative Working Capital
Working Capital = Current Assets – Current Liabilities
Some businesses have negative working capital: they get money from sales before they pay suppliers. For companies like Walmart and Amazon, they actually need no working capital because they negotiate deals in such a way that they only pay for things after 1-3 months. Most of the time, the stuff they buy is long sold by then. And people who go to Walmart to buy stuff will pay immediately, which means that Walmart is actually sitting on a pile of cash that it really does not need. So they can pay their debt slowly or use the extra cash for investment. These businesses basically are financed by their customers. Negative working capital is a tremendous thing to have in a business. Apparently, Groupon has a large negative working capital (4 million Groupons have now been sold already). They first charge users upfront, take a cut and pay merchants back later. This...