Here’s a bit of financial news that’ll open your eyes...or at least raise your eyebrows...
Bloomberg reports that in fewer than three years, Groupon Inc. - a coupon site that offers short term deals - has achieved a market valuation that some people estimate to be close to $3 billion.
According to the story, “ Unlike many new companies that dot San Francisco and its environs, Groupon’s success stems less from a breakthrough technology -- say, algorithms that improve Web search -- than from a straightforward use of e-mail, a communication tool that’s falling out of favor as Web surfers use social networks ... Groupon sends a daily e-mail to registered users in a given market, offering steep discounts on products and services, ranging from cupcakes to yoga classes, dinner cruises to dental exams. Groupon keeps a 50 percent cut of every deal sold, while the company benefits from a rise in new customers. Deals, known as groupons, activate when a certain number is sold, encouraging users to recommend offers to friends.”
Groupon currently serves more than 300 markets, and is estimated to have annual sales of about $500 million.
This could be a short-term fad, it could be a recession-era phenomenon that could go away when and if prosperity returns, it could be part of just another bubble that inevitably will pop.
But it might not be. Walmart already has been reported as emulating Groupon ... which could put this approach to discounting on an even faster track. Inevitably, there will be others.
Whether a short-term marketing gimmick or a sustainable business model, Groupon’s approach is definitely an Eye-Opener.
- Kevin Coupe
Bloomberg reports that in fewer than three years, Groupon Inc. - a coupon site that offers short term deals - has achieved a market valuation that some people estimate to be close to $3 billion.
According to the story, “ Unlike many new companies that dot San Francisco and its environs, Groupon’s success stems less from a breakthrough technology -- say, algorithms that improve Web search -- than from a straightforward use of e-mail, a communication tool that’s falling out of favor as Web surfers use social networks ... Groupon sends a daily e-mail to registered users in a given market, offering steep discounts on products and services, ranging from cupcakes to yoga classes, dinner cruises to dental exams. Groupon keeps a 50 percent cut of every deal sold, while the company benefits from a rise in new customers. Deals, known as groupons, activate when a certain number is sold, encouraging users to recommend offers to friends.”
Groupon currently serves more than 300 markets, and is estimated to have annual sales of about $500 million.
This could be a short-term fad, it could be a recession-era phenomenon that could go away when and if prosperity returns, it could be part of just another bubble that inevitably will pop.
But it might not be. Walmart already has been reported as emulating Groupon ... which could put this approach to discounting on an even faster track. Inevitably, there will be others.
Whether a short-term marketing gimmick or a sustainable business model, Groupon’s approach is definitely an Eye-Opener.
- Kevin Coupe
- KC's View:
