Posts Tagged social commerce
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.
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.
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
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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