5 ms·

My gut instinct is that this deal was never on the table. The rational minds at Google would have to be high on something really strong to even consider Groupon

by ajays 16y ago

My gut instinct is that this deal was never on the table. The rational minds at Google would have to be high on something really strong to even consider Groupon worth $6B. (If so, please share, people!). My cynical thinking is that these were rumors spread by people interested in seeing Groupon go public; the $6B from Google rumor makes for a nice, fat initial offering price. Groupon has zero barrier to entry and zero technology. Unless they have a strong IP portfolio (which they don't appear to be, given the number of competitors that have sprung up), I don't see the value here, other than brand name. I was given a Groupon for a local specialty chocolate vendor recently, so I decided to chat her up to see what she felt about it. She had tried Groupon, Townhog and a couple of others. She shrugged and said that she wasn't sure if she was going to try these again; but if she did, she'd use Townhog. It was clear that there was no barrier for her to switch. Why should merchants give Groupon 50% of the face value of coupon, if their competitor will do the same for 25%? And the next one at 10%?

zaidf 16y ago
Why should merchants give Groupon 50% of the face value of coupon, if their competitor will do the same for 25%? And the next one at 10%? Brand. It's why people pay for bottled water vs. free tap water. It's why Groupon can argue they can send more people to you than their competitors.
- ajays 16y ago
  Do you really think that the typical Groupon customer, who is extremely cost-conscious and willing to jump on a deal like this, won't switch to another coupon company if given a better deal? Say Groupon offers a 50% off $10 coupon for $5, and keeps the $5. The business is out $10 (for the goods). Now Soupon (fictitious name) comes along, offers a 60% off $10 coupon for $4; but keeps $2 and gives the business $2. Now the business is out only $8; the customer gets a better discount; and Soupon still makes money. Don't you think most of Groupon's customers will move to Soupon in a heartbeat?
  - zaidf 16y ago
    I don't, purely because local merchants are very, very brand conscious and suspicious of new brands. It is why they keep giving their business to Yellow Pages and to newspapers. It's why Google's had such a hard time cracking the local market. Groupon is the first tech brand that local merchants have totally bought into. Sure a percentage will be adventurous and go with the cheaper groupon-clone, but the vast majority will stick with the brand name imo.

by ajays 16y ago

zaidf 16y ago

Why should merchants give Groupon 50% of the face value of coupon, if their competitor will do the same for 25%? And the next one at 10%? Brand. It's why people pay for bottled water vs. free tap water. It's why Groupon can argue they can send more people to you than their competitors.

ajays 16y ago
Do you really think that the typical Groupon customer, who is extremely cost-conscious and willing to jump on a deal like this, won't switch to another coupon company if given a better deal? Say Groupon offers a 50% off $10 coupon for $5, and keeps the $5. The business is out $10 (for the goods). Now Soupon (fictitious name) comes along, offers a 60% off $10 coupon for $4; but keeps $2 and gives the business $2. Now the business is out only $8; the customer gets a better discount; and Soupon still makes money. Don't you think most of Groupon's customers will move to Soupon in a heartbeat?
- zaidf 16y ago
  I don't, purely because local merchants are very, very brand conscious and suspicious of new brands. It is why they keep giving their business to Yellow Pages and to newspapers. It's why Google's had such a hard time cracking the local market. Groupon is the first tech brand that local merchants have totally bought into. Sure a percentage will be adventurous and go with the cheaper groupon-clone, but the vast majority will stick with the brand name imo.