There’s a saying in Chinese, 团结是力量 (unity is strength). This is the concept behind the business model of the billion dollar company GROUPON. The site is now valued at some $6 billion after rejecting a buyout from Google last December. It’s been rumored that Groupon is on the road to an IPO for some $15 billion this year. So, with some $350-500 million annual revenue, what does this company has to offer to its consumers?
In properties, it’s location, location & location! In Groupon, it’s deal, deal & (more) deal! It’s as old as time, the yearning to get better deal than most. Collective power buying seems to be the way to do it, as suggested by how popular Groupon is. Incidentally, in China, the same strategy was adopted years ago by a group of Wenzhou residents who travel all over the region to acquire & speculate properties as a group (known as 温州炒房团). They arrived in bus loads and as a group is quite a force to be reckoned with!!! Hence, the idea is definitely not brand new, however, as an online tool, it takes a new twist with a time controlled environment, as in an auction. This kind of offers are also available on another Chinese online bookstores, where deals are “time-zoned” and as the clock ticks, one is beckoned to place one’s “bets”. I do believe it can be addictive for some, like in a casino-environment! So, it’d be very interesting to see how Groupon develops with time & how the new trend will catch on with millions of shoppers!
It’s been reported (at last count) that Groupon has some 44 million registered users across the world; the latest additions of which are from Hong Kong, Singapore and China. Originally based in Chicago and set up byAndrew Mason (who is a mere 30 year old chap!), Groupon is a very young enterprise. It’s incorporated in 2008 and yet it has had much interest from investors and got quite a bit of seed money in its coffer. From the look of things, Groupon is pioneered for success. It might even be bigger than Facebook in a few years’ time.
So, what is the lesson one can learn from this site? Well, for one, you’d have to sign up and look deeper than the deals. I checked through their Canadian, American, Hong Kong and Singapore sites. Judging from the increasing number of deals sold, it can be projected that there would be some changes in the future in its mode of operation. Currently, it’s one deal a day. But for huge market like Shanghai and Beijing, I see more than 1 deal a day (if that’s an authentic Groupon site, that is!). Groupon.cn showcases more than 1 deal a day. So, if the fever catches on elsewhere in the world, I would foresee more than a deal each day. As it is, Groupon has been said to turn away many deals, so much so that they account for 80-90% of companies enlisted. If that’s the case, then we’ll see many sites coming in to cater to the rest of the merchants who couldn’t get onto Groupon “favor” list. Then again, Google is already making headway in this arena and has plan to launch their own version of deals. The market is huge and the sky is the limit where this is concerned. It’ll be very interesting to see how things progress on this front. As I have said, we are in for interesting times. This is certainly the most interesting business model I’ve come across in recent times!