Groupon: Are Heavy Online Email Coupons a Fad ?

2 years ago, Groupon was considered the love child of the Wall Street market. A new up and comer company that had defined itself by offering heavily discounted coupons in large batches. Google had even approached the firm to acquire it.

However, times have fallen hard on Groupon and now its share price is fraction of what it once was so what gives? I believe one of the big things about Groupon is that its business model is unstable and easily copyable by any firm. Since the business is completely online, many coupon aggregators were very similar and Groupon lost a lot of competitive advantages. Another big reason is the negative publicity and how Groupon initially handled comments online. They lacked proper monitoring and triage to really understand the issues that some companies mishandled their coupon. Some businesses were forced to sacrafice quality and had to expand capacity to meet demand

Another reason I think Groupon’s model doesn’t work is that the intense price decrease of email coupons make the consumer behave differently. Consumers devalue the brand and the intense decrease in price promote them to withhold purchases of a product in lieu of a potential coupon. The newsletter sign-up process make it much easier to wait and just receivethe daily deals.

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