How does Groupon generate revenue?
- Because Groupon relies on its merchants to provide its consumers with products or services, they must continue to grow their merchant relationships to provide their customers with new products. Merchants provide the foundation of Groupon’s business, so without merchants, Groupon wouldn’t have anything to offer to its consumers and therefore not be able to generate revenue - the graph shows the importance of Groupon’s relationships with its merchant. Since Groupon’s relies on its merchants to generate revenues, we can conclude from the graph that the more merchant relationships they had, the more revenue they will generate
What attracts merchants to Groupon?
Merchants do not have to pay an upfront fee for Groupon’s services, so there is virtually no risk. This is attractive for small business owners since they may not have the means to pay for advertising, knowing they only have to pay Groupon once they start making money themselves. Also, Groupon customers typically spend more than the value of the deal and 91% return or plan to return to the business, so merchants are essentially guaranteed more clients and higher retention rates. Groupon’s merchant satisfaction rating is about 79% - 15 percent higher than the average business-to-business (B2B) merchant satisfaction score (all of these factors make Groupon the most attractive choice for the purpose of risk free marketing)
- “Competing in overcrowded industries is no way to sustain high performance. The real opportunity is to create blue oceans of uncontested market space.” (Citation: W. Chan Kim & Renee Mauborgne (October 2004). Blue Ocean Strategy. Harvard Business Review. P 76-84) - Bluce Ocean Strategy characteristics:
1) opportunity for rapid and profitable growth
2) creates value for buyers and company
3) technology innovation is not at the firm’s core
- This strategy is what Groupon has built its foundation. Groupon...
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