Written by Groupon has exploded over the past year resulting in a reported $6 billion Google acquisition bid a few weeks ago and rumors of an imminent IPO. But I don’t get it.
To me, it just seems like these guys are just delivering a new kind of coupon that wasn’t possible before crowd-sourcing was contemplated. In other words, they are first to market. I’m not saying this is an insignificant accomplishment by any means. But I really do believe that it won’t be tough for new entrants (more local, more segmented networks) to compete in a few months. These new entrants will quickly eat into Groupon’s margins and reach.
I think that all the hype for Groupon is based on revenue growth and margins. I must admit that this is refreshing to see because so many of these internet startups are valued so expensively before they make any real money. But I just don’t see their hockey stick growth curve continuing too much longer. Unlike Facebook, for instance, they haven’t built anything that can’t easily be replicated.
And it’s my gut feeling, there’s nothing special about Groupon in the long term.
If anything, Groupon, for me, has created something that no other site has – A non-following. To clarify, I still follow Groupon’s local deals here in Denver, but I only do so because I am too lazy to unsubscribe from their list. (Who know? Maybe I will buy another one someday…) The non-follow means I will not buy from Groupon as I know it’s far too trafficked. If I buy, say, a massage or anything that requires an appt, I know that if I don’t book immediately, I won’t be able to get in there for months. And yeah maybe it’s my own doing, but I don’t book those immediately. But screw that, that’s not how I operate. I buy these coupons from the smaller sites which, in time, will become their own Groupon-sized behemoths, until the one day we have a different coupon site for each individual sect of business. Hey, that’s not a bad idea….
It seems to me that Groupon has a lot more going for it than at first glance. It’s not only innovated crowdsourced coupons–it’s built a following of people who trust the company to deliver what they say they deliver.
This means they already have a competitive edge in the marketplace over any competitors–even if those competitors begin by offering more local deals. It’d be easy for Groupon to adapt, or even buy up these smaller companies.
Groupon’s only disadvantage is getting too big (and hence too slow when it’s time to adapt).