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> I’m not convinced Groupon has staying power. Sure, it’s uber-popular but how much longer will consumers be captivated by the flurry of deep-discount offers hi

by pclark 16y ago

> I’m not convinced Groupon has staying power. Sure, it’s uber-popular but how much longer will consumers be captivated by the flurry of deep-discount offers hitting their inboxes? Ah yes, because everyone knows consumers hate saving money, this is why coupons have never taken off in the past. Wait a minute. In 2009 hundreds of billions of actual coupons were used. Of all the companies people cite for a bubble, you choose the one making money hand over fist? Seriously? I think the most ridiculous statement people say is that Groupon isn't defensible, guys, Groupon has thousands of people calling companies every day - guys in a garage eating pizza can't exactly do this. (also, if you're saving people money, people have a tendency to remember your brand)

thewordpainter 16y ago
no one can deny what groupon has accomplished to date. you have to give them props. as is, they have first-mover advantage (at least in terms of the group discount space taking off). i know i completely abandoned groupon in favor of scoutmob, which requires no money down. i wrote a post similar to mark's why i believe groupon can't keep this up: http://adamwexler.wordpress.com/2011/02/09/groupon-is-about-to-reach-their-peak/ http://adamwexler.wordpress.com/2011/02/09/groupon-is-about-... interesting thing to note....although the general consensus is groupon passed on google, i've heard from a reputable source that it was the other way around, and google backed out of the deal.
Qz 16y ago
The problem is that Groupon's customers aren't actually the people buying coupons, it's the businesses selling coupons, and we've heard plenty of horror stories from that side of the coin. Whether that aspect is enough to dig Groupon's grave is an open question, but let's at least make sure we're approaching the question from the appropriate angle.
- pclark 16y ago
  If that is right - and it's totally possible - isn't this a fundamental flaw with the business model for all competitors too?
- replicatorblog 16y ago
  Have there been that many stories? I've heard a couple from small time coffee shops that may not be the best financial planners, but those few sad stories seem to reverberate without a lot of new voices joining the chorus.
  - awakeasleep 16y ago
    I'm going out on a limb here, but has anyone else noticed that HN has a tendency to hate on Groupon? We see dozens of articles like this reach the front page predicting Groupon's doom, always citing the same dissatisfied coffee shop, always attacking imaginary business models. I'd like to see someone refute Groupon's value as an advertising tool, or even compare it to existing alternatives. On top of that, a class of hacker news user exists who spells "Groupon" groupOn. It seemed liken impossibly childish insult, to mangle something's name, so I assumed it was an accident or maybe that's how Groupon used to be spelled when it was a startup. Well I looked it up, and no.
    - Tichy 16y ago
      Personally, I tend to hate it because I am convinced that coupons are evil. It is just a way to control people's behaviours and turn them into consumer sheep, which I resent from the bottom of my heart. I root for startups that empower people and open up new opportunities, not for ones that have found a loophole in the human psyche and exploit it to the maximum.
      - justincormack 16y ago
        Outside the US coupons are not a big business, at least in the countries I know. So I wonder if it will translate as profitably in the rest of the world.
        alextp 16y ago
        Here in brazil (at least in são paulo) there are around four companies (groupon included) fighting tooth and nail for this market, even using black-hat-ish techniques (unsolicited email, misguiding website, impossible-to-unsubscribe mailing lists, deceitful ads, etc). I think most urban-ish places with a capitalized youth are a ripe market for coupon-type businesses.
- pchristensen 16y ago
  The only horror stories I can remember are that Mimi's coffee in Portland (?) and the Japanese new year. I've heard other second- and third-hand reports with no names or specifics. The "merchant horror stories" don't pass the sniff test for me - it seems like the same one or two brought up over and over again. It just seems like a fake news trend. Andrew Mason said at startup school that the merchant satisfaction numbers are something like 95%. I
  - nickgeiger 16y ago
    For what it's worth, I talked to a yoga studio owner who had a horrible experience (with Living Social, not Groupon). It turns out that people looking for a cheap deal on yoga classes aren't good long-term customers so the loss never paid off. I agree that we've only heard horror stories, but I'd be curious if there are small business success stories or is the service only good for big companies who can take the loss?
    - pchristensen 16y ago
      Despite being super-hot right now, deal sites are still just a customer acquisition tool. Best Buy could flood their stores tomorrow by advertising 90% off plasma TVs. Small businesses don't have the same level of experience and sophistication around customer lifetime value, so they're more likely to make mistakes like that. One of the services that Groupon provides (no idea about LS or other deal sites) is deal shaping/sizing, to help merchants offer deals that will not be super-costly or overwhelming to the merchant while still be appealing to customers. The Japanese new year incident (http://news.ycombinator.com/item?id=2111609 http://news.ycombinator.com/item?id=2111609) describes this in more detail. I think even the anecdotes will become more and more infrequent as merchants and deal sites get better at this.
Tichy 16y ago
I don't think in general coupons are a good deal for people. It is mostly clueless people who fall for it. As JoelOnSoftware wrote somewhere, collecting coupons is like working for 7$/hour. With Groupon, even if you save 50% on your Sushi, maybe you spend 2 hours getting to that Sushi place, rather than 5 minutes to the one around the corner. However, there seems to be an infinite supply of clueless people, so the whole thing might still sail on forever.
- loire280 16y ago
  If your goal is saving money, that's true. However, much of Groupon's appeal is the incentive to try new restaurants or do new things. The sushi place around the corner may be good, but you're probably not going to remember your nth visit.
  - Tichy 16y ago
    You've got a point. In fact with the right context aware notifications, maybe Coupons are OK - like if you wanted to buy X anyway and you automatically save money. Then again if it worked that way, there would be no incentive for businesses to offer coupons...
vaksel 16y ago
the only one "coupon" I ever bought was for a $20 Amazon Gift card for $10 on Living Social. All those other coupons are almost always junk. The only reason it works, is that out of millions of people out there, there are a few for whom that one coupon was actually relevant. So essentially you sign up for 364 days of worthless spam, to save $10 once a year
- pclark 16y ago
  I think that a lot of people are very happy to be spammed in return for saving money.
  - dagw 16y ago
    I wonder how much the average Groupon user actually saves in a month/year. I just glanced through the last three month of groupon spam in my inbox and the only deal that I would be remotely interested in was $6 off at some pizza place I don't normally order from.
    - pclark 16y ago
      It almost certainly works out that if you are a Groupon customer you spend more money than you typically would - in your lifespan of Groupon. Whilst you save money on the first purchase, would you have bought it at all if not for Groupon? What about future purchases? You probably wouldn't have ever considered Balloon lessons if not for Groupon...
- rexf 16y ago
  Agreed, I only bought the $20 Amazon deal at Living Social since it's a guaranteed $10 savings at a company I frequent. Even then, I was hesitant to pull the trigger because I had to go through the registration process and opt-in to spam. While it's not my concern, I don't see how some of these deals by large, nationally recognized companies (ex: Gap, Amazon, B&N) would be sustainable. I'm sure they can charge it to marketing, but they're increasing sales by offering a substantial discount that makes them lose money on short term, small transactions. I assume they hope 1.) new customers are attracted, 2.) customers spend much more than $20, or 3.) customers who don't normally visit are attracted.
jerf 16y ago
Today's Groupon deal for my area is a $40 oil change for $20. Whoop-de-freaking do. Every third day or so, I get a flyer with that coupon and about a hundred other offers, which pile up in my recycling pile. When Groupon was younger, they ran more 90% deals, if I recall correctly. One way or another now Groupon is a company that offers me a small number of utterly pedestrian coupons a day, while I'm barraged with them in my snail mail. Presumably the 90% off approach where the offers were actually special doesn't scale. If the offers scaled, the businesses would already have been offering them through the existing coupon channels. Oh, and I'm about 50 miles from the closest Groupon hub; my physical mailbox offers me coupons for things way closer than that, some of which I can walk to. How does offering me an inferior selection of time-bound coupons that is beaten by my physical mailbox most every day make 6 billion dollars worth of sense‽ Groupon didn't create the idea of coupons themselves!
phlux 16y ago
I agree with your statements, but I have a question. If I am getting a groupon that gives me 50% off $100, and I actually spent the $50 of which groupon takes ~50%... at what point don't retailers start offering "groupon like rates" directly to me, cutting out groupon? Sure, many retailers will be too lazy due to the distribution groupon has - but won't there surely be this group of retailers?

by pclark 16y ago

thewordpainter 16y ago

no one can deny what groupon has accomplished to date. you have to give them props. as is, they have first-mover advantage (at least in terms of the group discount space taking off). i know i completely abandoned groupon in favor of scoutmob, which requires no money down. i wrote a post similar to mark's why i believe groupon can't keep this up: http://adamwexler.wordpress.com/2011/02/09/groupon-is-about-to-reach-their-peak/ http://adamwexler.wordpress.com/2011/02/09/groupon-is-about-... interesting thing to note....although the general consensus is groupon passed on google, i've heard from a reputable source that it was the other way around, and google backed out of the deal.

Qz 16y ago

The problem is that Groupon's customers aren't actually the people buying coupons, it's the businesses selling coupons, and we've heard plenty of horror stories from that side of the coin. Whether that aspect is enough to dig Groupon's grave is an open question, but let's at least make sure we're approaching the question from the appropriate angle.

pclark 16y ago
If that is right - and it's totally possible - isn't this a fundamental flaw with the business model for all competitors too?
replicatorblog 16y ago
Have there been that many stories? I've heard a couple from small time coffee shops that may not be the best financial planners, but those few sad stories seem to reverberate without a lot of new voices joining the chorus.
- awakeasleep 16y ago
  I'm going out on a limb here, but has anyone else noticed that HN has a tendency to hate on Groupon? We see dozens of articles like this reach the front page predicting Groupon's doom, always citing the same dissatisfied coffee shop, always attacking imaginary business models. I'd like to see someone refute Groupon's value as an advertising tool, or even compare it to existing alternatives. On top of that, a class of hacker news user exists who spells "Groupon" groupOn. It seemed liken impossibly childish insult, to mangle something's name, so I assumed it was an accident or maybe that's how Groupon used to be spelled when it was a startup. Well I looked it up, and no.
  - Tichy 16y ago
    Personally, I tend to hate it because I am convinced that coupons are evil. It is just a way to control people's behaviours and turn them into consumer sheep, which I resent from the bottom of my heart. I root for startups that empower people and open up new opportunities, not for ones that have found a loophole in the human psyche and exploit it to the maximum.
    - justincormack 16y ago
      Outside the US coupons are not a big business, at least in the countries I know. So I wonder if it will translate as profitably in the rest of the world.
      - alextp 16y ago
        Here in brazil (at least in são paulo) there are around four companies (groupon included) fighting tooth and nail for this market, even using black-hat-ish techniques (unsolicited email, misguiding website, impossible-to-unsubscribe mailing lists, deceitful ads, etc). I think most urban-ish places with a capitalized youth are a ripe market for coupon-type businesses.
pchristensen 16y ago
The only horror stories I can remember are that Mimi's coffee in Portland (?) and the Japanese new year. I've heard other second- and third-hand reports with no names or specifics. The "merchant horror stories" don't pass the sniff test for me - it seems like the same one or two brought up over and over again. It just seems like a fake news trend. Andrew Mason said at startup school that the merchant satisfaction numbers are something like 95%. I
- nickgeiger 16y ago
  For what it's worth, I talked to a yoga studio owner who had a horrible experience (with Living Social, not Groupon). It turns out that people looking for a cheap deal on yoga classes aren't good long-term customers so the loss never paid off. I agree that we've only heard horror stories, but I'd be curious if there are small business success stories or is the service only good for big companies who can take the loss?
  - pchristensen 16y ago
    Despite being super-hot right now, deal sites are still just a customer acquisition tool. Best Buy could flood their stores tomorrow by advertising 90% off plasma TVs. Small businesses don't have the same level of experience and sophistication around customer lifetime value, so they're more likely to make mistakes like that. One of the services that Groupon provides (no idea about LS or other deal sites) is deal shaping/sizing, to help merchants offer deals that will not be super-costly or overwhelming to the merchant while still be appealing to customers. The Japanese new year incident (http://news.ycombinator.com/item?id=2111609 http://news.ycombinator.com/item?id=2111609) describes this in more detail. I think even the anecdotes will become more and more infrequent as merchants and deal sites get better at this.

Tichy 16y ago

I don't think in general coupons are a good deal for people. It is mostly clueless people who fall for it. As JoelOnSoftware wrote somewhere, collecting coupons is like working for 7$/hour. With Groupon, even if you save 50% on your Sushi, maybe you spend 2 hours getting to that Sushi place, rather than 5 minutes to the one around the corner. However, there seems to be an infinite supply of clueless people, so the whole thing might still sail on forever.

loire280 16y ago
If your goal is saving money, that's true. However, much of Groupon's appeal is the incentive to try new restaurants or do new things. The sushi place around the corner may be good, but you're probably not going to remember your nth visit.
- Tichy 16y ago
  You've got a point. In fact with the right context aware notifications, maybe Coupons are OK - like if you wanted to buy X anyway and you automatically save money. Then again if it worked that way, there would be no incentive for businesses to offer coupons...

vaksel 16y ago

the only one "coupon" I ever bought was for a $20 Amazon Gift card for $10 on Living Social. All those other coupons are almost always junk. The only reason it works, is that out of millions of people out there, there are a few for whom that one coupon was actually relevant. So essentially you sign up for 364 days of worthless spam, to save $10 once a year

pclark 16y ago
I think that a lot of people are very happy to be spammed in return for saving money.
- dagw 16y ago
  I wonder how much the average Groupon user actually saves in a month/year. I just glanced through the last three month of groupon spam in my inbox and the only deal that I would be remotely interested in was $6 off at some pizza place I don't normally order from.
  - pclark 16y ago
    It almost certainly works out that if you are a Groupon customer you spend more money than you typically would - in your lifespan of Groupon. Whilst you save money on the first purchase, would you have bought it at all if not for Groupon? What about future purchases? You probably wouldn't have ever considered Balloon lessons if not for Groupon...
rexf 16y ago
Agreed, I only bought the $20 Amazon deal at Living Social since it's a guaranteed $10 savings at a company I frequent. Even then, I was hesitant to pull the trigger because I had to go through the registration process and opt-in to spam. While it's not my concern, I don't see how some of these deals by large, nationally recognized companies (ex: Gap, Amazon, B&N) would be sustainable. I'm sure they can charge it to marketing, but they're increasing sales by offering a substantial discount that makes them lose money on short term, small transactions. I assume they hope 1.) new customers are attracted, 2.) customers spend much more than $20, or 3.) customers who don't normally visit are attracted.

jerf 16y ago

Today's Groupon deal for my area is a $40 oil change for $20. Whoop-de-freaking do. Every third day or so, I get a flyer with that coupon and about a hundred other offers, which pile up in my recycling pile. When Groupon was younger, they ran more 90% deals, if I recall correctly. One way or another now Groupon is a company that offers me a small number of utterly pedestrian coupons a day, while I'm barraged with them in my snail mail. Presumably the 90% off approach where the offers were actually special doesn't scale. If the offers scaled, the businesses would already have been offering them through the existing coupon channels. Oh, and I'm about 50 miles from the closest Groupon hub; my physical mailbox offers me coupons for things way closer than that, some of which I can walk to. How does offering me an inferior selection of time-bound coupons that is beaten by my physical mailbox most every day make 6 billion dollars worth of sense‽ Groupon didn't create the idea of coupons themselves!

phlux 16y ago

I agree with your statements, but I have a question. If I am getting a groupon that gives me 50% off $100, and I actually spent the $50 of which groupon takes ~50%... at what point don't retailers start offering "groupon like rates" directly to me, cutting out groupon? Sure, many retailers will be too lazy due to the distribution groupon has - but won't there surely be this group of retailers?