Groupon Business Model Essay
Groupon Inc
Groupon is website that features discounted gift certificates usable at local or national companies. Groupon was launched in November 2008, and the first market for Groupon was Chicago. 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.
At the IPO in 2011, Groupon raised $700 million. New Enterprise Associates, Eric Lefkofsky and Brad Keywell investors in Groupon. In April 2010, Groupon raised $135 million from Digital Sky Technologies, a Russian investment firm. Total 2011 U.S. revenues were an estimated $460 million. Groupon’s 2011 estimated revenues are in the $3 billion to $4 billion range.
Groupon Business Model
The Groupon works as an assurance contract: if a certain number of people sign up for the offer, then the deal becomes …show more content…
If we analyze the business model of Groupon, at an upper level screening we will see that Groupon provides a platform to companies to introduce and sell their services & merchandise to a wider number of customers. These customers will in turn become long-term users and will benefit the supplier company in long run. In addition, it provides the supplier company with a platform for sales promotion and marketing.
However, a deeper research provides contradictory outcomes. Many smaller vendors find losses instead of profits. A study of 150 retailers showed that only 66% found the deals profitable. Furthermore, at the time of IPO, analysts find the Groupon's business model not sustainable. This does not ensure a continuous support to its suppliers in long run. There is no substantial value addition to suppliers. The Supplying companies tend to have other advertising and promotional methods to reach to its potential as well as loyal customers. Profits even after paying 25% to Groupon must be more than what they make with their alternative promotional
Groupon is website that features discounted gift certificates usable at local or national companies. Groupon was launched in November 2008, and the first market for Groupon was Chicago. 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.
At the IPO in 2011, Groupon raised $700 million. New Enterprise Associates, Eric Lefkofsky and Brad Keywell investors in Groupon. In April 2010, Groupon raised $135 million from Digital Sky Technologies, a Russian investment firm. Total 2011 U.S. revenues were an estimated $460 million. Groupon’s 2011 estimated revenues are in the $3 billion to $4 billion range.
Groupon Business Model
The Groupon works as an assurance contract: if a certain number of people sign up for the offer, then the deal becomes …show more content…
If we analyze the business model of Groupon, at an upper level screening we will see that Groupon provides a platform to companies to introduce and sell their services & merchandise to a wider number of customers. These customers will in turn become long-term users and will benefit the supplier company in long run. In addition, it provides the supplier company with a platform for sales promotion and marketing.
However, a deeper research provides contradictory outcomes. Many smaller vendors find losses instead of profits. A study of 150 retailers showed that only 66% found the deals profitable. Furthermore, at the time of IPO, analysts find the Groupon's business model not sustainable. This does not ensure a continuous support to its suppliers in long run. There is no substantial value addition to suppliers. The Supplying companies tend to have other advertising and promotional methods to reach to its potential as well as loyal customers. Profits even after paying 25% to Groupon must be more than what they make with their alternative promotional