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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