Archive for December, 2010

Groupon: I’m starting to get it

Call me dense, but since I joined Groupon this past March to stay informed of the next big thing, I’ve struggled to get it. By get it, I mean the way real fans of baseball the game get it. Like the way PR people get it’s not about just writing press releases (like my mother always asks.)

I'm still waiting for that Groupon for a Ducati. Until then mani-pedi's keep filling my inbox.

As an industry person in the social and e-commerce world, I didn’t quite get how it made money. And, as a consumer, I didn’t feel like the offers were relevant to me as a 41-year old male with more gadgets and clothes than I’ll ever need.  Seriously, how many massages and facials does a person need? All I know is that I get an email from Groupon every morning as I pour my coffee. I’ve deleted 100% of them before I finish my first cup.

Now that the hub-bub over the Google bid for Groupon has died down and the geekorati media have stopped fueling the irrational exuberance, the old world media have come in and done a better job explaining what the heck this thing is. Thanks New Yorker. Thanks Wall Street Journal. I heart your sanity.

What I’ve learned:

  • Groupon will do about a half a billion dollars in sales this year and has been profitable since the start
  • Has 40 million subscribers in 150 cities around the world
  • Promotes ~650 deals each day and more than 95% of those tip
  • Upwards of 26 million Groupons have been purchased world-wide
  • Groupon’s typical subscriber is in the sweet spot for just about every marketer: female, between the ages of 18-34, single, and makes more than $70,000 a year.

Clearly, it’s not going away. But I look hard at this insanely crowded market that is quickly becoming a real social commerce segment and part of the overall retail segment and I just don’t see how Groupon’s model is defensible.  What gnaws at me is this question of whether the the $6 billion offer is going to be bubkes in the log run? Odds are, it was a mistake to pass on the cash infusion and barriers to entry Groupon would’ve gotten from it. The big boys with their balance sheets and Bain consultants are coming after this market through acquisition and organically.

Bubkes or not, 2011 is going to be a very interesting year in e-commerce.

-Jose Mallabo

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An e-commerce company going social

Since moving back to Philadelphia, I’ve only eaten one cheese steak.  Hard to believe.  But the day is young and Geno’s is always open.  I’ve been more focused on working to get my company’s social media strategy up and running.  And, yes, Hillary it does take a village.  Thankfully my village at GSI is full of talented people willing to take my lead on it — especially our own Web dev guy we like to call Kevin.  Holla.

Ironically, guess what social platform is most used by our clients and employees? Nope. It’s not Facebook. Not Twitter. @GSICommerce we are big time LinkedIn.

Soon we’ll be able to thread our blog through our company pages and other channels.

Blogs are dead. Long live the blog.

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Dear BestBuy: #@$%!*9!?”

Dear BestBuy:

If you’re going to cancel my Christmas orders that I paid extra shipping to get well in advance of Christmas, please do me the kind favor of giving me at least 1 day’s notice before canceling it with no explanation.

I'm thinking that BestBuy's customer service is run by U.S. Airways

That order confirmation email you sent right after I plugged in my credit card information, led me to believe you were actually going to send me the product I paid my hard-earned money for.  There’s this thing in post-industrial society we like to call customer service. Let me go slowly. . . c-u-s-t-o-m-e-r. . . s-e-r-v-i-c-e.

If there's an alternative intepretation for "order being processed" and "estimated delivery date" I'd like to know. Stupid me.

You have my phone number. My email addresses (both of them.) You have my credit card info.  That’s more than my family has on me. Pick up that square thing on your desk and dial my number so I can at least try to fix it.

Instead, I’ll be finishing up my shopping at a Walmart or Target store tonight.

Thanks for nothing, WorstBuy.

-JoseMallabo

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My big fat wallet

It was starting to look like Costanza’s exploding wallet. So I dumped it out and out came a handful of receipts and a packet of Splenda — but mostly the pain in my right cheek was the heft of four gift cards. Each of them are about a year old – from last Christmas, of course.  The grand total of money on my unused cards = $150 – or about a week’s worth of groceries for a hungry vegetarian.

Wonder how many Macy's gift cards were in there?

With just two weeks before Christmas, I’m sure there are people who fully intend to buy actual gifts for their loves ones but will likely get too busy and end up buying a card off the end cap at Safeway or Genuardi’s instead.

I’m not judging you. We’ve all done it. Just know there’s a good chance that you’re taking your $20 or $50 bill and tossing it out the window of a moving car at night in a neighborhood you’ve never been in before.

Americans spend $65 billion on annually (a 2009 estimate) on gift cards with almost $7 billion of it going unused. That’s one tenth of the gross domestic product of The Netherlands. With 309 million people in the U.S. that’s roughly $23 per person in the U.S.  Based on that, I am seven times less likely to use gift cards than the average U.S. consumer.  Maybe a better way to look at it is the people who intend to buy me gifts are seven times more likely to forget.

It’s debatable.  In a pinch, I take PayPal.  And I use it most to buy gifts.  So, odds are if you PayPal me money, it will come back to you in the form of a durable good or White Elephant.

Imagine if the state governments took PayPal.  Now that would be true social commerce. If they did they wouldn’t have to use tax payer’s money to chase down unused, but already taxed money sitting on gift cards.

Gift cards are part of the country’s hidden economy that includes mail-in rebates, flex spending accounts and extended product warranties. Money spent but left unused like that yarn cardigan from your aunt Martha from Pasadena.

People freely buy a gift card for someone (who may not use it), but flee the register if asked to buy an extended warranty on a $59 DVD player.

– Jose Mallabo

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