If Google were smart (and I thought they were until I heard they were considering making a bid on Groupon), they would not try to buy out Groupon, but instead create their own internet coupon service. Of course it would take a lot of groundwork to get it up and running, groundwork that Groupon has already done such as getting clients, but come on it's Google. All of their potential clients can be found through a Google search to begin with. Google is so large and has so much power they could probably work out a deal with major companies to offer more than just one daily coupon. Some companies may even be willing to offer coupons all the time on Google. For example, say you search for Starbucks on Google, a coupon comes up offering $.50 off a coffee, or something along those lines. Some people would probably think this is a ridiculous idea, due to the fact that so many people would be willing to go after these coupons. I don't necessarily agree with this. For starters, some people would simply be too lazy to print off these coupons, especially everyday. But even if people were willing to print the coupon and go to Starbucks to buy a coffee every single day, wouldn't it be worth it to Starbucks? Anyway, this idea of Google starting their own coupon company instead of simply buying out Groupon is probably a little bit of a stretch. But if anyone can do it, Google can. And I can almost guarantee that it has been discussed amongst executives at Google.
I think that Groupon is a viable business method. It's the basic concept of "you scratch my back, I'll scratch yours." Groupon promotes a product or service, if the product or service is purchased, they get a cut. It is relatively cheap advertising for the business, and for Groupon, it's a business with very low overhead costs. As long as people are willing to print out and use the Groupons, they should continue to be successful.
Groupon seems to have a stranglehold of the industry. Before researching for this blog, I had no idea that there were any other online coupon companies similar to Groupon (I was well aware of Groupon). If Google does indeed purchase Groupon, I personally think it will only tighten their grip on the online coupon industry.
Groupon should ABSOLUTELY sell out to Google. Though it is unclear at this point, Google has reportedly offered $5-$6 billion to Groupon. Anytime you can sell a 2-3 year old company for billions of dollars, YOU DO IT. It's a no brainer.
It is true that Google can provide their own coupon service through their search engine, but bottom line is that Group-on has a great foundation to work on (a huge customer list and business model that works). The fact is Google sees the potential for this company. If their betting 5-6 billion on it imagine what they expect their return to be. Group-on in my opinion is here to stay and maybe they should shoot for an IPO and possibly form a new Cash Cow.
ReplyDeleteEven though you make a valid point that Google could start their own coupon/ social media company, I would agree that Groupon should sell out. It would be smarter for Google to buy off Groupon due to several reasons. The first is that Groupon is the top competitor in this field, and has recently expanded to over 29 countries. If Google were to buy this, they would become the top competitor and not have to worry about entering into a market as #2. Also, Groupon is a relatively new company and is worth an estimated $3 million. The idea that Google is willing to pay $6 million for this company means that Google sees the success and additionally expects it to continue to grow in the future. The owners of Groupon have an interesting decision to make, but I think Google will become the new leader within this market.
ReplyDeleteLet's not forget that Google has probably the biggest customer base, so creating their own coupon company would be relatively easy. As Eddie mentioned Groupon has an already well functioning business model and has the advantege of being first. But in comparison to Google, which has the experience and huge resources, it is a small player. I think that Groupon sooner or later will be overtaken,the only question is by whom, maybe Google, or Facebook?
ReplyDeleteYou know I had the same thought as you did and so did everyone else at Google at some point think about starting off a "wannabe" groupon site to enjoy the many profits that await this viable business idea. Yes, with its popularity, Google can afford to do this and will win everyday! Groupon might still have loyal users, but eventually, will face so much threat from Google's very own coupon site. I personally would sell a dotcom business that can entertain offers in the billions of dollars from anyone. But hey, greed is not just good; its is GREAT! The shear reason facebook held out from huge offers is to keep realizing profits. Same reason Groupon's very own executives choose not to sell. Maybe that $5-6 billion will double and be compelling enough to seal the deal for Google.
ReplyDeleteI personally do not use Groupon's coupons as I try not to print things unless I really have to. Maybe if I saw more giant relailers offering more of the items I want, I might use it. I think it will be great if Groupon encourages businesses to honor coupons presented on handheld devices or laptops. It can help promote a green image for the company.
For thoughts concerning Groupon's model and how businesses can gain more sales, see my blog
I agree with your opinion that Google’s strong position in the worldwide market. Google can establish its own cupon website, and I think it will become very popular in the near future. However, we can not ignore Groupon’s brand awareness and strong potision in the market. According to article, since Groupn was established in 2008, it has been growing very fast, and Groupn has announced that they extend operation in Asian by the acquisition of many local companies such as uBuyiBuy and Beeconomic. Groupon also buy Atlaspost which is popular social networking site in Taiwan. These famous website will be transferred to Groupon. Groupn moves into Asian market because of its potential to grow. As we can see, Groupn is a leading compnay that offer cupon service worldwide. I belive Groupon has been growing based on some specific know-how which Google dose not have.
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http://classic.cnbc.com/id/40443575
Just because Google has been immensely successful in the search engine industry does not mean they will be equally successful in all their business ventures. There are several reasons Google is offering $6 billion for Groupon and one of those reasons is because of how far ahead in the industry Groupon is. Their market coverage outnumbers any competitor by over 100 cities and is currently expanding into Asia. I agree with Yuki's comment that Groupon has specific know-how that no other other company possesses. While the $6 billion looks like a very lucrative offer, Groupon's customer growth rate (300%) and revenues (over $1 billion annually) are to high and promising to justify selling now.
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