7 ms·

Under the hood, Groupon is declining in Boston

73 points by rocksy 15y ago

arthurgibson 15y ago
I'm confused at why the summary of a detailed case study gets upvoted. I think pg needs to adjust voting again.
- shii 15y ago
  Don't worry, anything that the hivemind likes for the moment will rocket up, no matter how shitty. Groupon=sucks iz goood, no matter if it's worthless meta.
baggins 15y ago
Lacking detail, but an interesting piece nonetheless. The novelty has probably worn off, and if you can't get beyond things most people never buy, like spa treatments and luxury items, then it's going to be tough to keep the momentum going.
- kmccarth 15y ago
  if you are looking for more detail, definitely read the entire case study (link also in post): http://blog.yipit.com/2011/06/03/groupon-s-1-reveals-business-model-deteriorating-in-oldest-markets/ http://blog.yipit.com/2011/06/03/groupon-s-1-reveals-busines... reader beware: the case study is a pain to read
  - deleted 15y ago
    [deleted]
  - vacanti 15y ago
    Why is it a pain to read? (Always trying to improve our writing)
    - kmccarth 15y ago
      Take this with a grain of salt (I am no skilled writer myself): I found the organization to be fragmented. Instead of digesting one theme straight through, I found myself having to refocus on each main point. Hope this helps in any fashion
Hisoka 15y ago
Having own mailing lists in the past, I can say this is most likely true. Think about it - most deals Groupon sends are not of interest to you. Because of that, you're gonna ignore more and more of their emails, and eventually you're gonna stop opening those emails. The open rate of a Groupon email will just keep decreasing, and as such as the value of a subscriber base is gonna deteriorate.
- jfernandez 15y ago
  It seems like they could benefit from offering better filters/subscription methods to their members, e.g. I want to receive only restaurant deals as a simple filter. Sure it'd decrease their overall coverage but it could help retain the value of the emails sent... I think we've all gotten to that ignore point with certain senders.
  - mitjak 15y ago
    Definitely. One can only stand so many spa and skin treatment discounts per week. Then again, I wouldn't imagine hackers to be the main target group for the majority of groupons.
    - Qz 15y ago
      I've heard that their main target group is young professional women, which makes the spa/skin stuff a lot more sensible.
  - firebones 15y ago
    Limitations in inventory (limited by sales force reach, geography and the number of their business clients) will make effective filtering very difficult. If you think of deals as SKUs, there's a huge granularity mismatch between filtering 50 deals in my geographical area vs. filtering millions of products at Amazon. (Not to mention that it would seem to be very difficult for them to capture much useful data about user preferences to make recommendations or perform proactive filtering.)
- SkyMarshal 15y ago
espadagroup 15y ago
Groupon is eventually going to have to end up creating a self serve product for business' and send out a daily digest to subscribers of the relevant deals in the area
- waterside81 15y ago
  They already do. Groupon Stores allows businesses to create their own offers that get approved and then scheduled by Groupon.
adam 15y ago
I suspect this may be true, but if you're Groupon, you're not just sitting around waiting for the daily deals business model to become more and more saturated, you're hard at work on your "next thing" and your next "big thing." Look already at the flash mob deals they're doing that are location based, the deal they just struck with expedia, the deals with national brands they're starting to do more of. Those are just derivatives of their core idea but also all bring in serious cash. But then there are things they're likely working on that will go beyond the deal space and in to other services for the tens of thousands of businesses they now have relationships with. Think cross-business loyalty cards, point of sale systems, reservation systems, etc. If you think of a small business' "stack," they're just at marketing right now with the deals stuff, but there's no reason why they can't inject themselves further on down the business stack successfully. Deals will always be a part of their business I suspect, but in 2-3 years not their core business model, just an accepted concept in a much larger offering to businesses.
- edw 15y ago
  I think the Expedia-Groupon deal bodes very poorly for both companies. Expedia is worried about their core business and is throwing money at Groupon (in the form of subsidizing deals) in order to associate itself with a company that is perceived by many to be up and coming. Groupon gets to look like it's innovating, when all it's doing is taking money from the nerds for the ability to hang out with the cool kids for a while.
Cherian_Abraham 15y ago
I cant see their costs coming down anytime soon. Their customer acquisition costs are $1.43 for every $1 spent. And now, with "Real time groupons" launched in Chicago, imagine the amount of deals they will have to line up that would require for them to keep me interested. I dont deny that they are attacking a problem that I do have - "Where should I go out to eat tonight?" and target me with real time deals based on where I am now. But in order to seed enough deals, they have an uphill task on lining up enough businesses (on top of the 50k they currently have) and enough deals. Even with the several thousand sales folks they currently have, its a gargantuan task. I want them to succeed, but I think they bit off too much.
- retube 15y ago
  Any idea what their rate of client acquisition is given their current sales force of 8,000?
- r00fus 15y ago
  The sad thing is that with Google's backing, they would have had immense resources to eat FourSquare, LivingSocial, and Facebook's lunch for these kind of local advertisements. To me, Groupon's leadership were idiots for passing up the Google $6B buyout... and it will be readily apparent to everyone in a few months.
- sunchild 15y ago
  I keep seeing this question: "Where should I go out to eat tonight?" I live in NYC. I can find the answer to that question in 1000 places, online and offline. I can't see how a daily discount email service helps to answer that question.
Apocryphon 15y ago
I like how the anti-bubble articles are now pinpointing the specific weaknesses of the companies. Well, the stories following LI's IPO were more about how the investors pumped up the value, than anything criticizing LI itself. But yeah, are we due to see critiques of of any other high-profile startups that are going public? Because I want to see what's wrong with Pandora.
- aristus 15y ago
  Once a company files for an ipo they enter a quiet period in which they cannot answer or speak in the media. It's open season on them until the Day. Go back and look T articles about google between April and august 2004.
- imjustatechguy 15y ago
  I strongly believed that LinkedIn was overvalued, but I didn't think it was a basket case. LinkedIn has loyal users, and it is moderately profitable. It just has to figure out how to best monetize them. LinkedIn has some potential if it can figure out an effective monetization strategy. People keep coming back to LinkedIn without LinkedIn paying hugely to attract them. Groupon is highly vulnerable to competition and even now it is very not profitable. Insiders are also cashing out to a huge degree. I think Groupon is unique in its current position. It is in a much worse position than LinkedIn in my opinion. LinkedIn is a viable business, although it may not grow to be absolutely huge (although it might), but Groupon could easily go to zero and quite quickly.
  - Apocryphon 15y ago
    So Groupon may be a MySpace that will be doomed by its Facebook, you mean.
deleted 15y ago
[deleted]

73 points by rocksy 15y ago

arthurgibson 15y ago

I'm confused at why the summary of a detailed case study gets upvoted. I think pg needs to adjust voting again.

shii 15y ago
Don't worry, anything that the hivemind likes for the moment will rocket up, no matter how shitty. Groupon=sucks iz goood, no matter if it's worthless meta.

baggins 15y ago

Lacking detail, but an interesting piece nonetheless. The novelty has probably worn off, and if you can't get beyond things most people never buy, like spa treatments and luxury items, then it's going to be tough to keep the momentum going.

kmccarth 15y ago
if you are looking for more detail, definitely read the entire case study (link also in post): http://blog.yipit.com/2011/06/03/groupon-s-1-reveals-business-model-deteriorating-in-oldest-markets/ http://blog.yipit.com/2011/06/03/groupon-s-1-reveals-busines... reader beware: the case study is a pain to read
- deleted 15y ago
  [deleted]
- vacanti 15y ago
  Why is it a pain to read? (Always trying to improve our writing)
  - kmccarth 15y ago
    Take this with a grain of salt (I am no skilled writer myself): I found the organization to be fragmented. Instead of digesting one theme straight through, I found myself having to refocus on each main point. Hope this helps in any fashion

Hisoka 15y ago

Having own mailing lists in the past, I can say this is most likely true. Think about it - most deals Groupon sends are not of interest to you. Because of that, you're gonna ignore more and more of their emails, and eventually you're gonna stop opening those emails. The open rate of a Groupon email will just keep decreasing, and as such as the value of a subscriber base is gonna deteriorate.

jfernandez 15y ago
It seems like they could benefit from offering better filters/subscription methods to their members, e.g. I want to receive only restaurant deals as a simple filter. Sure it'd decrease their overall coverage but it could help retain the value of the emails sent... I think we've all gotten to that ignore point with certain senders.
- mitjak 15y ago
  Definitely. One can only stand so many spa and skin treatment discounts per week. Then again, I wouldn't imagine hackers to be the main target group for the majority of groupons.
  - Qz 15y ago
    I've heard that their main target group is young professional women, which makes the spa/skin stuff a lot more sensible.
- firebones 15y ago
  Limitations in inventory (limited by sales force reach, geography and the number of their business clients) will make effective filtering very difficult. If you think of deals as SKUs, there's a huge granularity mismatch between filtering 50 deals in my geographical area vs. filtering millions of products at Amazon. (Not to mention that it would seem to be very difficult for them to capture much useful data about user preferences to make recommendations or perform proactive filtering.)
SkyMarshal 15y ago

espadagroup 15y ago

Groupon is eventually going to have to end up creating a self serve product for business' and send out a daily digest to subscribers of the relevant deals in the area

waterside81 15y ago
They already do. Groupon Stores allows businesses to create their own offers that get approved and then scheduled by Groupon.

adam 15y ago

I suspect this may be true, but if you're Groupon, you're not just sitting around waiting for the daily deals business model to become more and more saturated, you're hard at work on your "next thing" and your next "big thing." Look already at the flash mob deals they're doing that are location based, the deal they just struck with expedia, the deals with national brands they're starting to do more of. Those are just derivatives of their core idea but also all bring in serious cash. But then there are things they're likely working on that will go beyond the deal space and in to other services for the tens of thousands of businesses they now have relationships with. Think cross-business loyalty cards, point of sale systems, reservation systems, etc. If you think of a small business' "stack," they're just at marketing right now with the deals stuff, but there's no reason why they can't inject themselves further on down the business stack successfully. Deals will always be a part of their business I suspect, but in 2-3 years not their core business model, just an accepted concept in a much larger offering to businesses.

edw 15y ago
I think the Expedia-Groupon deal bodes very poorly for both companies. Expedia is worried about their core business and is throwing money at Groupon (in the form of subsidizing deals) in order to associate itself with a company that is perceived by many to be up and coming. Groupon gets to look like it's innovating, when all it's doing is taking money from the nerds for the ability to hang out with the cool kids for a while.

Cherian_Abraham 15y ago

I cant see their costs coming down anytime soon. Their customer acquisition costs are $1.43 for every $1 spent. And now, with "Real time groupons" launched in Chicago, imagine the amount of deals they will have to line up that would require for them to keep me interested. I dont deny that they are attacking a problem that I do have - "Where should I go out to eat tonight?" and target me with real time deals based on where I am now. But in order to seed enough deals, they have an uphill task on lining up enough businesses (on top of the 50k they currently have) and enough deals. Even with the several thousand sales folks they currently have, its a gargantuan task. I want them to succeed, but I think they bit off too much.

retube 15y ago
Any idea what their rate of client acquisition is given their current sales force of 8,000?
r00fus 15y ago
The sad thing is that with Google's backing, they would have had immense resources to eat FourSquare, LivingSocial, and Facebook's lunch for these kind of local advertisements. To me, Groupon's leadership were idiots for passing up the Google $6B buyout... and it will be readily apparent to everyone in a few months.
sunchild 15y ago
I keep seeing this question: "Where should I go out to eat tonight?" I live in NYC. I can find the answer to that question in 1000 places, online and offline. I can't see how a daily discount email service helps to answer that question.

Apocryphon 15y ago

I like how the anti-bubble articles are now pinpointing the specific weaknesses of the companies. Well, the stories following LI's IPO were more about how the investors pumped up the value, than anything criticizing LI itself. But yeah, are we due to see critiques of of any other high-profile startups that are going public? Because I want to see what's wrong with Pandora.

aristus 15y ago
Once a company files for an ipo they enter a quiet period in which they cannot answer or speak in the media. It's open season on them until the Day. Go back and look T articles about google between April and august 2004.
imjustatechguy 15y ago
I strongly believed that LinkedIn was overvalued, but I didn't think it was a basket case. LinkedIn has loyal users, and it is moderately profitable. It just has to figure out how to best monetize them. LinkedIn has some potential if it can figure out an effective monetization strategy. People keep coming back to LinkedIn without LinkedIn paying hugely to attract them. Groupon is highly vulnerable to competition and even now it is very not profitable. Insiders are also cashing out to a huge degree. I think Groupon is unique in its current position. It is in a much worse position than LinkedIn in my opinion. LinkedIn is a viable business, although it may not grow to be absolutely huge (although it might), but Groupon could easily go to zero and quite quickly.
- Apocryphon 15y ago
  So Groupon may be a MySpace that will be doomed by its Facebook, you mean.

deleted 15y ago

[deleted]