Whither Groupon?

What sold me on Groupon was the knowledge that I could get my money back if the deal didn’t tip.

What keeps me from using Groupon is the range of businesses represented.

My approach to Groupon is this: I’m interested in buying Groupons for things I want or need, regardless of whether they’re offered by a business I already patronize. In fact, I can only remember seeing one that was for a place where I’m a current customer, and the services offered weren’t ones that interested me.

So I am that new customer they’re looking for. It’s just that the businesses I’m looking for don’t seem to be there. That means I don’t even click through most of the e-mails, because the deals just aren’t of interest.

But who else is buying Groupons? (Or deals from Living Social, Family Finds, and even Active.com–there are many places to act on this new business model.) Is it new customers? Existing customers? Do people use Groupon as a way to find products and services of interest, whether or not they buy the specific deal?

I’m hearing that each of these things may be true. But I wonder how much the businesses benefit if they only get 25% of the price. That can be a significant loss leader, particularly if it doesn’t actually result in more business over time.

Sure, Groupon’s got revenue–$713 million last year, a substantial increase from $30 million in 2009. But is it sustainable, or is it a flash in the pan? I continue to get the sense that it may be the latter. And I wonder when the next dot-com bust is coming. But I do not wonder if it’s coming.

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Posted on June 15, 2011, in Marketing and tagged , , . Bookmark the permalink. Leave a comment.

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