Posts Tagged Groupon
Look at this.
Not only is e-commerce growing – projected to hit almost $300 billion by 2015 – it is growing as a percentage of overall retail.
How? The easy and obvious answer is that people are finding shopping online easier and more convenient than going to the store.
The same analyst firm that projected this growth also did a study recently (with my current employer GSI Commerce) looking at holiday 2010 shopping data from 15 online retailers representing about $1 billion in gross merchandise sales.
One of the primary takeaways is that email and search remain the most influential channel to moving shoppers from browsing to buying. Yes, you read that right – old school e-mail can still bring it.
That inflamed a huge tidal wave of boos from the Mashable and social media faithful (I consider myself both) – but when you really dig into the numbers, study and where we are as a social media using country it really makes sense. Think about it. Most people who are the breadwinners and decision makers on discretionary spending in the U.S. have been on e-mail for 15 to 20 years. The early adopters of that group mayyyybe have been on social media networks for a 2-3 years. When you factor in the difference in dynamics between these two mediums it really makes a lot of common sense why email is still more powerful in e-commerce than social.
E-mail is very private. It’s a true 1:1 medium that we’ve been conditioned for most of our adult lives to keep to ourselves and guard with legal disclaimers like “this transmission is meant solely for the recipient and is confidential” blah, blah, blah. Email has spent the greater part of the last generation becoming the closest thing to our digital identity or our virtual Social Security Number. So, if a retailer can get to me there – odds are I’m primed to buy from them.
Social networks on the other hand are very public. Every major social network’s product settings are defaulted to share everything you do on the network. Most people rarely ever switch those settings to something other than that. So, while finding and sharing good deals on underwear, vacations and massages is great fun. It doesn’t seem likely that people like my father or middle aged buddies would show the world they’re buying these things.
This is my semi-professional opinion. I live in e-commerce and make a living as a social media guy. But kick my tires. Walk across the building in your office and show a total stranger your Facebook wall. Then hand the him your BlackBerry or iPhone and ask him to thumb through your email.
It’s this sense of intimacy with our emails that explains why Groupon and LivingSocial are growing so fast while true social networks like Facebook and Twitter are still finding their legs in e-commerce. I get into cold sweat at just the idea of even my mother reading my emails. Groupon and LivingSocial aren’t so much social commerce companies but at their core are email marketing geniuses that buy and sell local deals with the leverage of their members (that’s the social part) to push down prices for the individual consumer.
E-mail commerce. Maybe it’s not a popular headline, but email still works and will likely remain a big part of that $300 billion market. It’s no wonder why all favorite social networking sites update me on new features, product news and privacy updates on my email. I still read them.
– Jose Mallabo
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.)
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.
Amazing how hot the juncture between e-commerce and social networking has gotten. It’s simple, really. E-commerce is eating into the overall retail segment. And, marketers go where the crowds are. Right now those crowds are not on AOL or WPIX (except for this page about Victoria’s Secret). They’re on Facebook and Twitter.
I remember having some very heated dialogue over using ‘social commerce’ as a thought leadership position within the corporate PR program at eBay about 3+ years ago. I don’t recall what side of the argument I was on, but needless to say, despite the PR agency’s best efforts (you know who you are) to make it real, it took a Joe Pesci pen to the neck (Nicky in Casino) and never saw the light of day.
Sudden hotness has arrived in that kink of a place where social and commerce are meeting.
After CyberMonday all the rumors were about Google to buy Groupon for $2.5 billion (Kara Swisher reports the offer is $5.3 billion). A colleague of mine asked if they’d call it Goopon? Heck, for that mountain of money, they can sponsor the TSA and rename it Gropeon. Today, Payvment announced a $6 million round of venture financing. In recent weeks Facebook has launched Deals to sit on top of its Places product. And, all you need to do is do a Twitter search for #CyberMonday to see how much traction commerce gets on Twitter.
So, while TechCrunch ponders if Amazon missed the boat on social commerce the reality is we all did. Or we would’ve called Nicky and his pen off back in 2007, created a Moto RAZR app for surfing the Urban Outfitters page on Facebook and retired on Black Friday 2009 on the speculation that Google was going to buy it.
Lesson of the day: A lot of the time the PR firm is right.
Update 1: Dec. 2: Groupon: In the days since Mashable posted the Google buys Groupon rumor, most of the banter has been about how sexy the deal is. Rumors about M&A are dead sexy and dramatic. But we all know that most deals don’t work. And the honeymoon usually ends quickly once the hot company gets ingested. I’m just happy someone is giving some sound analysis to this deal before it gets done. Thanks, Sucharita.
Update 2: Dec. 3: Milo.com: Having worked with eBay Classifieds Group before and while classifieds was being integrated into the eBay.com marketplace, I find this $75 million deal to buy Milo.com…fascinating. I have to figure it out in light of all the above, eBay’s constant refrain about mobile as well as it’s M&A history. More later.
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