On Groupon’s Death Watch
In the end of the book, I write about emerging platforms like Force.com, WordPress, and Groupon, among others. If I sat down to write about that topic today, Groupon would certainly not be included. It would be replaced with Kickstarter, Udemy, and a bevy of other promising platforms.
Groupon may in fact be living on borrowed time. The DeathWatch is on for the company, as this RRW piece points out:
Using Groupon costs nothing upfront, but can turn out to be very expensive for vendors. Groupon takes a 50% cut of sales that typically already discount 50%. Some businesses (see GrouponWorks.com) absorb the hit just fine by selling high-margin add-ons and sparking return visits. For others, a 75% revenue hit is awfully rich, even for a loss leaser – and especially if the discounts go to existing customers or folks “just passing through.” Meanwhile, Groupon doesn’t share any customer information with vendors – not even email addresses. And many merchants worry about projecting weakness and cheapening their brand.
True, but I’d argue that Groupon’s demise has been exacerbated because the company hasn’t done much to become a true platform. Consider these questions:
- Has it added many viable planks in the last 18 months?
- Has it really cross-polinated on other platforms?
- Are there any really cool apps for Groupon? Are developers chomping at the bit to take Groupon in new and exciting directions?
- Has it embraced platform thinking?
It turns out that CEO Andrew Mason is rethinking Groupon’s business model. Check out this video from Bloomberg West:
Perhaps the company’s business model was never solid, much less worth such a lofty public valuation. But I just don’t see too much external innovation coming from its ecosystem–and that is never good.
What say you?
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