Case Study Groupon's Business Model:
In few years, the company spread over many countries, but was at the same time very criticized for its business model, its profitability and its impact on local businesses.
For all these reasons, and even though Groupon has a strong team dedicated to Customer Support and Social Media, Groupon has a weak brand image and a low reputation. The customers benefit from a discounted price, whereas the merchant who offers the deal benefits from advertising and a subsequent increase in its number of customers.
A deal is valid only if a predefined minimal number of customers buy it. The main Twitter account has 60, followers and posted tweets.
Groupon is a daily deal website considered to be one of the top ten innovative Business Models with a huge user base of 83 million across 43 countries. Groupon sells coupons in a very unique way; As mentioned above, Groupon follows Daily deal Aggregator Business Model which enables groups of people who want to purchase a particular product or. The business model consists of four components, Groupon company, Groupon website, local business and customers. Groupon sell their products or services of their website, and these products/services based on targeting customers’ needs, offered by local businesses in some selected local merchants. Free Essays words ( pages) Wal-Mart Essay - Overview When someone says “Wal-Mart,” there are several ideas that probably come to mind; an idea such as “Everyday Low Prices,” Wal-Mart superstores, and that Wal-Mart is the biggest corporate giant in the world wouldn’t be too far fetched.
On Facebook, Groupon has also one global page withfans as on Mayand a different Ecommerce model of groupon essay for each country and city with an unequal number of fans from 10, tofor Hong-Kong. LivingSocial choose a different strategy, and has only one global Facebook page with 1, fans, and only few local accounts in specific cases.
Having few accounts, while Groupon has an account per country and city in addition to its global account, allows LivingSocial to have a more important number of followers and fans on its global account see Fig.
Groupon has a Facebook application which allows users to receive daily deals that match their likes and interests on Facebook. Groupon has also the same strategy on Youtube, with one global account, and one account per country but none for cities. Sometimes it is used to show testimonies of local merchants who had a successful experience with Groupon.
Groupon has also a blog for each country, with a variable content. The design sometimes differs radically between countries. For example, a cupcake company had to cookcupcakes and hire extra-staff to respond 3 to the high-demand, whereas it usually cooked cupcakes monthly 5.
Since, Groupon has defined a limit of availability for each coupon according to the capacity of the local business. In Europe, the company was mainly criticized because of the large amount of customers coming at the same time. On the one hand, customers had often the feeling to have a service of lower quality than other customers.
On the other hand, local businesses had to deal with a large amount of customers at the same time they see as not or less profitable. On March 26tha Belgian local merchant posted an article on Facebook to tell her story and how her business was nearly about to close after a Groupon deal 6.
Her article had a lot of echo on the web, but also on traditional media.
Groupon officially answered to the merchant few days later on Twitter, Facebook and its official blog to give their version and tell they would try to help the merchant to get out of its difficult situation 7. Even though its support is reactive on social media, Groupon seems to have an overall bad online reputation.
This means that the most frequent queries on Google are really negative. Groupon is much more mentioned on the web than its competitors see Fig. Dholakia May showed that even though a company loses a small amount of money per Groupon user, it can be profitable when you take into account unredeemed coupons, and can also increase the number of non-Groupon customers, including those who come back at full price after their Groupon experience 9.
Another more general study on daily deal sites 5 Wilkes D. In response to this, Groupon commissioned a study by ForeSee which had more positive conclusions on daily deals. One of the conclusions was that the large majority of customers had or planned to do business with the company again There is no definitive answer concerning the profitability of daily deals for local businesses.
Groupon must be seen as a new form of advertising, and it can be sometimes profitable, and sometimes not. Moreover, there is a risk that the advertisement brings no customers in traditional advertising, whereas Groupon gives a guarantee of the venue of a minimal amount of customers.
Local businesses have to calculate themselves how to be profitable with Groupon Byers, Mitzenmacher, Zervas explained this phenomenon by three main causes: Groupon users might experiment and rate more than average users, the rating was artificially high before the Groupon Deal, and a product or service of lower quality to Groupon customers due to the fact some businesses consider they paid less Some businesses consider Groupon customers not as real customers and a sunk cost, while they should be considered as an opportunity cost, as they are potential long-term customers.
When a scandal happens, they also react on social media and on their blog to tell their version of the story, and try to help the merchant in difficulty. Groupon should find a way to explain to merchants how they can get the most out of Groupon, and make them understand that the profitability of a Groupon deal depends on them.
It seems that this work of pedagogy with merchants has already been successfully done by Groupon, and merchant satisfaction increased significantly see Fig.Last week, news broke that e-commerce deal site Groupon would be joining the ever-increasing number of restaurant delivery services with its new program Groupon To benjaminpohle.coming in its home city of.
Groupon moved away from relying on the “push” business model of driving sales through email, to a “pull” model, where users can come directly to the platform and browse existing deals.
Groupon Quietly Launches Groupon Stores, a Marketplace for Its $2 Billion Goods Business If Groupon's history was as a virtual coupon shop, it's future is starting to look more like a more.
Essay on Ecommerce Business Models Words May 15th, 4 Pages ESSAY 2: Select two ecommerce websites with totally different business models and describe their business models. ECMM can describe facilitators and barriers to adopt advance e-commerce, and suggest a guideline of efficient and effective e-commerce adoption to SMEs which are planning to introduce e-commerce technologies at the first time or to move to a further stage.
Groupon was founded in , offering online discounts for local businesses in the Chicago area. Merchants were able to access new customers without paying any marketing fees they’d see with other online and email marketing programs .