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What worries me is that Groupon is still just a company that 'happened' to be able to raise enough capital to become the biggest of 100s of businesses all doing

What worries me is that Groupon is still just a company that 'happened' to be able to raise enough capital to become the biggest of 100s of businesses all doing the same thing. Nothing about their business is hard to replicate, nothing is revolutionary, nothing has not been done before. It seems many investors and analysts see a 'social media shopping experience' while all I see is a flyer in my mailbox 'on the internet'. What's to stop Groupon from becoming the MySpace of online coupons to a future Facebook in the same sphere?

drumdance 14y ago
This is somewhat true of Amazon as well, though they later went on innovate with their web services. Early on they just happened to be one of the first and capitalized on their access to cheap capital.
- sabat 14y ago
  I don't think Amazon falls into the same bucket. Most of what Amazon does is a bit better than its would-be competition. Whereas what Groupon does is exactly what everyone else would do.
  - numbsafari 14y ago
    I agree. What a lot of people don't realize is that Amazon has amazing logistics and considerable skill in merchandising. Building that logistics footprint is why Amazon has survived and others failed (speaking as someone who worked for an early competitor). Look at Best Buy and ask yourself, is Amazon really so easy to replicate? Granted... I still don't think Amazon is worth the crazy multiple that they trade at, but you can't put them in the same class of company as GroupOn. What GroupOn has is a brand name and a legion of sales people and contacts with local businesses. Unfortunately, GroupOn has a way of doing terrible things to local businesses that can't operate at the scale of something like GroupOn and which lack (in a sadly large number of cases) the simple business math skills to know when a GroupOn deal is no good for them. So, the two assets GroupOn has (brand and sales/contacts) are both fairly impaired and much more easily replicated than what Amazon has to offer: logistics, infrastructure and algorithmic secret sauce... not to mention brand and customer loyalty.
    - SODaniel 14y ago
      I would also argue that most investors see a huge premium in the non-tangible asset 'track record', where Amazon truly shines. Looking at S3, E2 etc. it is easy to see that while Amazon has a fairly 'boring' bread a butter retail business they are also true innovators.
      - sabat 14y ago
        Absolutely Amazon is an innovator. And surprisingly so -- who would've predicted AWS?!
- pyoung 14y ago
  Amazon's distribution and logistical network is a major asset that would cost a ton of money to replicate. This is a major barrier to entry and Amazon's primary competitive advantage in the online retail space. Groupon's main advantage (other than being the first mover) is merely a giant e-mail list of customers and merchants, nothing that a scrappy team can't try to replicate on the cheap.
  - mattmanser 14y ago
    I think you underestimate the cost of a giant e-mail list of customers and merchants that's clean and they have some sort of relationship with. If for some reason Groupon went under tomorrow, what do you think that asset would be worth? As from my experience with sales, a lot.
    - SODaniel 14y ago
      I agree it would be worth a pretty penny. But $8 billion? I think not.
hkmurakami 14y ago
I'm not sure how big of an advantage it is, but isn't the "Groupon" brand fairly valuable? For a non-user of daily coupon sites like myself, the first site I'm going to visit if my daily-couponing interest is piqued, will be Groupon. The counterargument of course, is that daily deals sites only attract the bargain hunters who have little to no brand loyalty, so even the "biggest brands in the business" don't have retention power. Now that I've written this post out, perhaps the latter effect is in fact stronger...
ye-olde-taper 14y ago
Nothing. But these investors are only in for the short-term. They will simply move on to the next thing.

drumdance 14y ago

This is somewhat true of Amazon as well, though they later went on innovate with their web services. Early on they just happened to be one of the first and capitalized on their access to cheap capital.

sabat 14y ago
I don't think Amazon falls into the same bucket. Most of what Amazon does is a bit better than its would-be competition. Whereas what Groupon does is exactly what everyone else would do.
- numbsafari 14y ago
  I agree. What a lot of people don't realize is that Amazon has amazing logistics and considerable skill in merchandising. Building that logistics footprint is why Amazon has survived and others failed (speaking as someone who worked for an early competitor). Look at Best Buy and ask yourself, is Amazon really so easy to replicate? Granted... I still don't think Amazon is worth the crazy multiple that they trade at, but you can't put them in the same class of company as GroupOn. What GroupOn has is a brand name and a legion of sales people and contacts with local businesses. Unfortunately, GroupOn has a way of doing terrible things to local businesses that can't operate at the scale of something like GroupOn and which lack (in a sadly large number of cases) the simple business math skills to know when a GroupOn deal is no good for them. So, the two assets GroupOn has (brand and sales/contacts) are both fairly impaired and much more easily replicated than what Amazon has to offer: logistics, infrastructure and algorithmic secret sauce... not to mention brand and customer loyalty.
  - SODaniel 14y ago
    I would also argue that most investors see a huge premium in the non-tangible asset 'track record', where Amazon truly shines. Looking at S3, E2 etc. it is easy to see that while Amazon has a fairly 'boring' bread a butter retail business they are also true innovators.
    - sabat 14y ago
      Absolutely Amazon is an innovator. And surprisingly so -- who would've predicted AWS?!
pyoung 14y ago
Amazon's distribution and logistical network is a major asset that would cost a ton of money to replicate. This is a major barrier to entry and Amazon's primary competitive advantage in the online retail space. Groupon's main advantage (other than being the first mover) is merely a giant e-mail list of customers and merchants, nothing that a scrappy team can't try to replicate on the cheap.
- mattmanser 14y ago
  I think you underestimate the cost of a giant e-mail list of customers and merchants that's clean and they have some sort of relationship with. If for some reason Groupon went under tomorrow, what do you think that asset would be worth? As from my experience with sales, a lot.
  - SODaniel 14y ago
    I agree it would be worth a pretty penny. But $8 billion? I think not.

hkmurakami 14y ago

I'm not sure how big of an advantage it is, but isn't the "Groupon" brand fairly valuable? For a non-user of daily coupon sites like myself, the first site I'm going to visit if my daily-couponing interest is piqued, will be Groupon. The counterargument of course, is that daily deals sites only attract the bargain hunters who have little to no brand loyalty, so even the "biggest brands in the business" don't have retention power. Now that I've written this post out, perhaps the latter effect is in fact stronger...

ye-olde-taper 14y ago

Nothing. But these investors are only in for the short-term. They will simply move on to the next thing.