Groupon
Groupon is an American global e-commerce marketplace connecting subscribers with local merchants by offering activities, travel, goods and services in 13[2] countries. Based in Chicago, Groupon was launched there in November 2008, launching soon after in Boston, New York City and Toronto. By October 2010, Groupon was available in 150 cities in North America and 100 cities in Europe, Asia and South America, and had 35 million registered users.[3][4][5][6] By the end of March 2015, Groupon served more than 500 cities worldwide, nearly 48.1 million active customers and featured more than 425,000 active deals globally in 48 countries.[7][8][9]
Not to be confused with Groudon.Type of business
Online deal marketplace
- Nasdaq: GRPN
- Russell 2000 component
Global
Dušan Šenkypl (interim)
US$515 million (2023)
US$−18 million (2023)
US$−55 million (2023)
US$571 million (2023)
US$−41 million (2023)
2,213 (2023)
Groupon MyCityDeal, Ideel, LivingSocial, CommerceInterface, Adku, SnapSave, Swarm, Mob.ly, PrettyQuick LLC, Groupon Getaways, Aisle50, GrouponLive, Plumfare, Boomerang, Inc., Cloud Savings Company
November 2008
Active
The idea for Groupon was created by former CEO and Pittsburgh native[10] Andrew Mason.[11] The idea gained the attention of his former employer, Eric Lefkofsky, who provided $1 million in seed money to develop the idea. In April 2010, the company was valued at $1.35 billion.[12] According to a December 2010 report conducted by Groupon's marketing association and reported in Forbes magazine and the Wall Street Journal, Groupon was "projecting that the company is on pace to make $1 billion in sales faster than any other business, ever."[10]
In its first earnings release as a public company, Groupon reported a 2011 fourth-quarter loss of $9.8 million on an adjusted basis, disappointing investors.[13] Additional investor concerns arose after the company restated 2011 revenues downward in March 2012.[14]
Business[edit]
Business model[edit]
When it first launched, the company offered one "Groupon" per day in each of the markets it served. The Groupon worked as an assurance contract using The Point's platform: if a certain number of people signed up for the offer, then the deal became available to all;[74] if the predetermined minimum was not met, no one got the deal that day.[10] This reduced risk for retailers, who can treat the coupons as quantity discounts[10] as well as sales promotion tools. In the early years before revenue splits began to adjust as necessary, Groupon made money by keeping approximately half the money the customer pays for the coupon. More recently that split could vary depending on many factors.[10][75][76]
Unlike classified advertising, the merchants advertising on Groupon do not pay any upfront cost to participate: Consumers are able to search and browse deals via web or mobile and can subscribe to receive emails featuring deals they are interested in based on preferences they input.[10] Groupon employs copywriters[77] who draft descriptions for the deals featured by email and on the website. Groupon's promotional text strategy in the early years for the deals has been seen as a contributing factor to the popularity of the site, featuring a distinctive mix of thorough fact-checking and witty humor.[77]
Some publications have noted potential problems with the business model. For example, the Wall Street Journal has reported that a successful deal could temporarily swamp a small business with too many customers, risking a possibility that customers will be dissatisfied, or that there won't be enough product to meet the demand.[10] In response to these issues, Groupon officials have stated that deals sold will be capped in advance to a number that the business can service effectively.[10]
In 2015, it was reported that 88% of merchants agree that their Groupon deal brought in new customers, and 82% of customers say they are likely to return to the merchant again.[7] One analysis found only ~20% of Groupon buyers returned for full-price purchases. [78][79]
In 2010, it was reported that local merchants found it difficult to get Groupon interested in agreeing to a particular deal. According to the Wall Street Journal, seven of every eight possible deals suggested by merchants were dismissed by Groupon.[10]
Groupon offers a mobile application which allows users to browse, buy deals, and redeem them using the screen as a coupon.
In addition to daily local deals, Groupon's channels have included: Groupon Goods, launched in September 2011, which focuses on discounted merchandise, although Groupon officially announced the closure of goods on February 19, 2020, but then decided almost three months later to phase down the Goods business and cut 44% of its employees;[80] Groupon Getaways,[81] which offers vacation packages and travel deals; and GrouponLive,[82] where consumers can find discounts on ticketed events [83] Groupon has also emerged as a check on price increases for certain essential commodities in many countries.[84]
Geographic markets[edit]
Groupon has served markets in several countries including, the United States,[85] Canada, Ukraine, Germany, Greece, France, the Netherlands, Belgium, the United Kingdom, India, Indonesia,[86] Ireland, Israel,[87] Denmark,[88] Thailand,[89] United Arab Emirates,[90] New Zealand[91] and others. In 2010, Forbes noted that there were over 700 Groupon copycat sites, the majority of them existing overseas.[10][12]
On February 19, 2011 The Wall Street Journal reported that Groupon was preparing to launch in China.[92][93] Groupon subsequently entered into the China market in a joint venture with Tencent and launched "Gaopeng". After a year of struggling in the established market, Goapeng subsequently merged with Futuan.
Groupon also launched in the MENA region with Groupon UAE on June 16, 2011.[94]
Groupon entered the Indian market through the acquisition of local company SoSasta in Jan 2011.[95] Finally, after winning a battle to acquire the groupon.co.in domain name, the Indian business was renamed Groupon in Nov 2012.[96][97] In August 2015, Groupon gave up control of its India unit to Sequoia Capital and renamed the company Nearbuy.[98] In February 2011, Groupon Russia announced it would join the Russian Company Mail.ru in order to start offering deals on its social network Odnoklassniki. This way, users would be able to buy and share deals from Groupon on their profiles.
Financials[edit]
New Enterprise Associates, Eric Lefkofsky and Brad Keywell are investors in Groupon (Lefkofsky and Keywell later formed the investment company Lightbank; Groupon is listed as a Lightbank investment).[99] In April 2010, Groupon raised $135 million from Digital Sky Technologies, a Russian investment firm.[100] On December 29, 2010, Groupon's executive board approved a change to Groupon's certificate of incorporation that would permit the company to raise $950 million in venture capital funding, based on a valuation of $6.4 billion.[101]
From January 2010 through January 2011, Groupon's U.S. monthly revenues grew from $11 million to $89 million. Consolidated revenue for the full year 2014 reached nearly $3.2 billion.[32]
In October 2010, Yahoo! was rumoured to have offered over $3 billion to acquire Groupon.[102] On November 30, 2010, it was reported that Google offered $5.3 billion with a $700 million earnout to acquire Groupon and was rejected on December 3, 2010.[103] After the rejection of the Google/Groupon buy-out, Groupon proceeded with their own initial public offering.
Groupon's consolidated gross billings for the full year 2014 increased 32% year-over-year to $7.6 billion.[32]
Groupon Now application[edit]
In 2011, Groupon developed an application, Groupon Now, aimed at smartphone and tablet users. The application consists of two buttons: "I'm Hungry" and "I'm Bored." Once a user clicks on one of the buttons, the app then locates the closest and best deals for food or entertainment, respectively, using geolocation.[104]
Groupon Promise[edit]
Groupon have the Groupon Promise to ensure that customers are satisfied with their purchase and if customers are disappointed with their purchase, Groupon will try to work things out with the customers or give them a refund.[105] The Groupon Promise is essential in dissipating cognitive dissonance and perceived risk.
Groupon VIP[edit]
On February 20, 2012, Groupon announced a "VIP Membership" program, with a membership fee of $30 annually.[106] This program gives VIP members access to deals 12 hours earlier than non-members, as well as access to expired deals (in the "Deal Vault") and easy returns of deals (in exchange for "Groupon bucks").
Groupon MerchantOS[edit]
Groupon MerchantOS is a suite of products and tools for merchants running with Groupon. The suite includes Groupon Rewards, Groupon Scheduler and Groupon Payments.
Groupon Rewards
On May 10, 2012, Groupon announced the launch of Groupon Rewards in the United States. Rewards is a loyalty program for merchants to reward customers for repeat visits with a Reward of their choosing. Unlike "buy 9 and get the 10th free" punchcards, a consumer earns Rewards by using any major credit card saved in their Groupon account when they visit their favourite local merchants. When a customer spends an amount pre-determined by the merchant, the customer unlocks a Reward to use on a future visit.[107][108] The rewards program was later removed due to lack of engineering support.[109]
Groupon Scheduler
Groupon Scheduler is an online booking tool for merchants, allowing their consumers to seamlessly book appointments for services at the time of purchasing their Groupon deal. This tool is targeted at merchants running deals where appointments are required, for example in the health and beauty industry or for classes and activities.[110]
Groupon Payments
The newest addition to the suite of merchant-facing products is Groupon Payments, which was launched in September 2012. Groupon Payments offers merchants an infrastructure for accepting credit card payments at a low cost.[111]
As of December 2015, MerchantOS is no longer a Groupon division.
Reception[edit]
Super Bowl commercials[edit]
Groupon aired a controversial Super Bowl XLV advertisement in which actor Timothy Hutton begins by making a plea for the people of Tibet before delivering the punch line: "But they still whip up an amazing fish curry."[112] Critics of the ad took to several social media outlets[113] to argue that Groupon was using the plight of Tibetans to sell their services. The commercial angered consumers who described the ad with adjectives including "tasteless," "tacky," "vulgar" and "detestable".[114] The following day, Groupon responded by defending their commercial and their philanthropic stance.[115][116]
On February 10, 2011, Groupon's founder Andrew Mason apologized and pulled the ad.[117]
The company waited seven years before it would try another Super Bowl ad.[118] The commercial that aired during Super Bowl LII featured Tiffany Haddish, a comedian and active Groupon user.[119]
Violation of gift certificate expiration laws[edit]
In March 2011, Eli R. Johnson filed a lawsuit in federal court against Groupon, based on a claim that the company issues "gift certificates" that are not allowed under the Credit Card Accountability Responsibility and Disclosure Act. The act prohibits retailers from setting expiration dates less than 5 years after a card is purchased.[120] The class action lawsuit was settled on December 17, 2012.[121]
Massachusetts Alcoholic Beverages Control Commission[edit]
In March 2011, the Massachusetts Alcoholic Beverages Control Commission notified Groupon that it was in violation of state law that prohibits discounting of alcoholic beverages. Groupon notified Massachusetts subscribers of a temporary suspension in the use of its discount vouchers for alcohol at participating restaurants.[122]
UK Office of Fair Trading investigation[edit]
During 2011 there were reported breaches of British advertising regulations to the Advertising Standards Authority.[123] In December 2011 the Office of Fair Trading (OFT) launched an investigation into Groupon after the firm broke regulations 48 times in 11 months.[124]
The OFT concluded in March 2012 that Groupon was in "widespread breaches" of UK consumer laws[125] and were ordered to "clean up their practices" within three months including ensuring its website was accurate, realistic, claims related to any beauty or health products offered were substantiated and that refund and cancellation policies were in accordance with current regulations.[126]
Groupon and Chilean consumer office lawsuit[edit]
The agency filed the lawsuit after a series of faults in the delivery and conditions of products and services sold to consumers.
In August 2016, the disagreements between the Chilean National Consumer Service (Sernac) and Groupon were evident. Both decided to raise a collective mediation for a series of questions that the entity dependent on the Ministry of Economy for the services of the virtual platform. In spite of the negotiations, the negotiations did not arrive at good port. And a few days after Christmas, Sernac filed a class action lawsuit against Groupon.
According to the agency, Groupon breached the conditions offered and contracted with consumers, in particular, due to non-compliance with deadlines offered and committed for the delivery of products or services. It even accuses it of not delivering the items purchased by consumers, with the consequent unilateral cancellation of purchases or having offered products and services without stock available.
This is compounded by the fact of dispatching articles of less value to the acquired or sending another product to the purchased, defaulting promotions and offers, "without respecting discount coupons offered and purchased by consumers," reads the lawsuit filed before the 18 ° Civil Court of Santiago.
According to information revealed by Sernac in the judicial action, during 2016 the service received numerous claims against Groupon. As of December 20, these totalled 1,958, which resulted in legal action. "The defendant incurs a serious violation of the Consumer Protection Law, violating the basic and irrevocable right, which is the right to truthful and timely information that assists every consumer," said the letter.[127]
Living on Groupon ("Live Off Groupon" program)[edit]
In May 2010, Groupon created a challenge to live on Groupons for one year. The contestant Josh Stevens travelled throughout the United States and to the United Kingdom and purchased all food, drinks, travel, entertainment and more from Groupon for 365 days. At the end of the year, he received a prize of $100,000.[128]
