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If you've had no experience in E-commerce it's often overlooked just how hard it is to get people to come to your site and open their wallets. This is part ana

If you've had no experience in E-commerce it's often overlooked just how hard it is to get people to come to your site and open their wallets. This is part analytical, part marketing and part secret sauce. Groupon has figured it out and they are scaling it up. This is not something that anyone can replicate. Anyone can build a group-buying site and hire a sales force to do deals. Acquiring the members and getting them to buy stuff to the point where you are doing $50MM in sales p/m is a vastly different set of challenges that I think most of their competitors are incapable of.

enjo 16y ago
I wonder what Living Social is doing these days in revenue? It may be difficult, but you can't convince me it can't be replicated for far under $5 Billion. In my small sample Groupon hardly has a ton of brand loyalty and they certainly haven't penetrated the larger mindshare in the same way companies like Google or Facebook have. Google surely knows something that I don't... but I just can't imagine them shelling this type of money out for something like this.
- vladd 16y ago
  Google could build it for sure, but they can't have any guarantees that it won't turn into a failed Wave or Lively. They already have coupons for local listings ( http://www.google.com/local/add/coupons http://www.google.com/local/add/coupons , Google sign in required) and I don't see that anywhere near as popular as Groupon. On the other hand, their ad business could benefit greatly from a coupon/promotion system that actually works. They already have advertisers pouring in billions of dollars, just imagine the leverage of owning the world's leading coupon platform as well --they just need to improve revenue by 10% or so and you have 0.5 billions more each year, which is enough to justify the 5 billion price tag.
stevenj 16y ago
Ya, scale can be a powerful competitive advantage. "The social proof phenomenon which comes right out of psychology gives huge advantages to scale—for example, with very wide distribution, which of course is hard to get. One advantage of Coca-Cola is that it's available almost everywhere in the world. Well, suppose you have a little soft drink. Exactly how do you make it available all over the Earth? The worldwide distribution setup—which is slowly won by a big enterprise—gets to be a huge advantage.... And if you think about it, once you get enough advantages of that type, it can become very hard for anybody to dislodge you." -Charlie Munger [1] [1] http://ycombinator.com/munger.html http://ycombinator.com/munger.html ----- On a somewhat related note, if there's anybody out there that wants to build a Groupon clone, or sell excess inventory of some product, or provide daily deals for anything, and you don't want to build the tech, check out http://cajoots.com http://cajoots.com (a project of mine).

enjo 16y ago

I wonder what Living Social is doing these days in revenue? It may be difficult, but you can't convince me it can't be replicated for far under $5 Billion. In my small sample Groupon hardly has a ton of brand loyalty and they certainly haven't penetrated the larger mindshare in the same way companies like Google or Facebook have. Google surely knows something that I don't... but I just can't imagine them shelling this type of money out for something like this.

vladd 16y ago
Google could build it for sure, but they can't have any guarantees that it won't turn into a failed Wave or Lively. They already have coupons for local listings ( http://www.google.com/local/add/coupons http://www.google.com/local/add/coupons , Google sign in required) and I don't see that anywhere near as popular as Groupon. On the other hand, their ad business could benefit greatly from a coupon/promotion system that actually works. They already have advertisers pouring in billions of dollars, just imagine the leverage of owning the world's leading coupon platform as well --they just need to improve revenue by 10% or so and you have 0.5 billions more each year, which is enough to justify the 5 billion price tag.

stevenj 16y ago

Ya, scale can be a powerful competitive advantage. "The social proof phenomenon which comes right out of psychology gives huge advantages to scale—for example, with very wide distribution, which of course is hard to get. One advantage of Coca-Cola is that it's available almost everywhere in the world. Well, suppose you have a little soft drink. Exactly how do you make it available all over the Earth? The worldwide distribution setup—which is slowly won by a big enterprise—gets to be a huge advantage.... And if you think about it, once you get enough advantages of that type, it can become very hard for anybody to dislodge you." -Charlie Munger [1] [1] http://ycombinator.com/munger.html http://ycombinator.com/munger.html ----- On a somewhat related note, if there's anybody out there that wants to build a Groupon clone, or sell excess inventory of some product, or provide daily deals for anything, and you don't want to build the tech, check out http://cajoots.com http://cajoots.com (a project of mine).