Groupon or GroupOff?

Groupon has had phenomenal growth in the past three years and many more competitors such as LivingSocial have popped up, many turning niche to compete. Launched in November 2008 by Andrew Mason the company now operates in 43 countries with "about 7,000 employees". The business was offered $6bn from Google which Groupon turned down.

For those who don't know? Groupon will offer their users in each market a "Groupon" each day. The deal needs to be bought by a certain number of people so that it becomes available to all. The company has had both good and bad reviews by businesses. The benefits include being able to draw in new customers which can then become loyal and make repeat sales. It's not usual for the business to make a profit from Groupon in fact many companies make losses. These are justified as a marketing expense and I have also heard a number of unsuccessful reviews where the companies don't get the support needed. They already have over 83m subscribers so it is quite an attractive opportunity for many businesses.

I feel that not every business is going to be suited to running a deal because Groupon is trying to make profit and they may stretch your business too far. Its so important for the business to really think about whether the deal Groupon wants to run will suit their business.

Groupon reportedly made $713.4 million in 2010 and has already bought in $644.7m in the first quarter of this year and has only made a profit in the first quarter of 2010 of $8m. This could be put down to its rapid growth and high marketing costs. Its obvious that Groupon are making sure that they have majority market share and are looking for long-term profits. With an IPO in the pipe line are investors going to get the profits they seek and are the business going to be better off or are Groupon just going to cash in. Their IPO is reported to make Groupon worth $25bn.

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