New forms of e-commerce keep on appearing, and one good example of this is Groupon. To Mark Zuckerberg’s jealousness, Groupon is the fastest growing company ever according to Forbes and still keeps on growing. As we know, this company’s business model is based on discounts (coupons) by sales volume (group), so the attractiveness is going in all directions: to the customer, to companies working with Groupon, ant obviously to Groupon.
Unfortunately this e-business model leaves an enormous gap regarding competitors. Since there is no major protection in this way, competitors are reproducing in a geometric way. Despite the still Groupon’s doubtless leadership, its main competitor, Living Social has got more web traffic according to a report on comScore published by Businessinsider.com. There isn’t yet any number or argument that proves how competitors could affect Groupon, but still this gap is something they must consider for the long run. As a main part of the SWOT analysis, competitors should be taken seriously, especially in web-designed business, where market entrance is much more viable.
According to Latest Technology Trends.com, a couple of juicy offers ranging between $1.7 and $4 millions have been made to Groupon from Yahoo, but they just passed. But what is important with this numbers is to be aware of the huge importance of this business model: promotes volume sales, lower prices, ensures demand (which helps have more contribution margin), and all this means in a general way health to the economy. Hopefully, everybody wins, but the only condition is to complete the target consumption. This last sentence is the one that glorifies but at the same time condemns this business. Having said this, it’s crucial for Groupon to keep themselves safe from competitors, because if not, they’ll steal volume (something is currently happening in fact), which will higher prices, and therefore will make this business model unattractive. The inconvenient will not be only for Groupon, but for the whole rising industry and market.
As businesses, let’s take this example as an experience to learn (from every point of view: the incredible growth, but also the potential crisis it’s being menaced to). As consumers, let’s think about buying these coupons, market could not be as beg as we may imagine, in some time this perishable product is going to expire.
Links:
http://www.forbes.com/forbes/2010/0830/entrepreneurs-groupon-facebook-twitter-next-web-phenom.html
http://www.businessinsider.com/livingsocial-groupons-biggest-competitor-now-gets-more-web-traffic-than-groupon-2010-8
rhttp://www.latesttechnologytrends.com/2010/10/why-groupon-is-no-ebay/
