Google Offers – Is Groupon in Trouble?

Will Google Offers annihilate the competition?

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Google Offers – Is Groupon in Trouble?
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I’m sure you recall when Groupon turned down a reported $6 billion offer from Google a few months back. Many (not all) thought Groupon was crazy to turn it down, considering how many daily deal/offers sites have been coming out of the woodwork, and how easy such a concept is to replicate.

Do you think Google will take over as the leader in Groupon’s space? Comment here.

Google made no secret of the fact that it would be aggressively pursuing this market, after Groupon declined the offer. Google’s Marissa Mayer pointed out that they already had some Groupon-like products, but that didn’t include a Groupon clone, per se. That is until word came out about Google Offers in early February, when Mashable obtained an official fact sheet about the product. This week, Google officially announced the beta version of it with a few select cities (Portland, NYC, Oakland, and San Francisco).

It does indeed appear to be a Groupon clone, sending daily deal offers to users via email (which I’m sure is only the beginning). The actual document has been deleted, but it did appear that the service would use Google checkout.

Groupon may have a head start in this space, but Google has several clear advantages (depending upon the extent of which they capitalize on): search, Place Pages, AdWords, AdSense, Latitude, Android, and Gmail come immediately to mind. Then there’s that whole expanding “social layer” thing.

It would appear that Groupon is vulnerable in terms of being the leader in the deals space. Last month, we looked at the narrowing gap between Groupon and its biggest competitor LivingSocial. Articles like this one called “Why Groupon Sucks For Merchants and LivingSocial Doesn’t” probably don’t help too much. That particular article compares the merchant experience of Groupon advertisers to “dealing with a child”.

Groupon has been making a name for itself, with some high profile (Super Bowl), if controversial, advertising. But LivingSocial isn’t shying away from TV ads either, and it has some Amazon money (as well as money from others) backing it up.

According to TechCrunch, Groupon just got a new $6 million infusion of capital, following a recent $16.2 million round. Just this week, Groupon also acquired Pelago, the makers of the Whrrl location-based service check-in app. This could turn out to be a huge deal for Groupon, as Foursquare continues to gain traction in the location-based market, as an attractive way to promote local businesses. Of course Google isn’t shying away from that area either (neither is Facebook for that matter), and Foursquare doesn’t seem opposed to the idea of partnering with Google.

Google may be the most dangerous threat to all players in this space. It has an extensive history in local and a slew of tools to help facilitate the success of a local business-based offers product. Even with the search engine’s recent Panda update, local seems to have come out ahead. Having a mobile platform like Android can’t hurt either.

Will Google Offers be a success? Tell us what you think.

Google Offers – Is Groupon in Trouble?
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  • JJ

    Let’s see here. Lets get a bunch of geeks to work out deals with hard working local business. the answer is, Google’s offers will be the worst discounts on the web. Mark my word. Chicago based advertising firm Groupon will end up getting more of an offer from Google when the geeks fail.

  • http://www.wsd.co.il WSD

    Groupon is crazy, they should have taken the 6$ billion,
    hell, ill sell my mom for that amount of money.

    Now seriously, “start-up” companies wish they could sell for 6$ billion, I cant find any logical reason not to.

  • http://thewebsensesolution.com Jon

    It will be interesting to see how this one plays out. I think the whole group couponing thing is a trend that will start to decline, but Groupon stands to take a pretty big hit here unless they come up with some innovative ideas.

  • http://www.seowebexpert.co,uk Dave Wales

    I think Groupon must have been crazy to turn down that offer. With Google’s web dominance, it’s only a matter of time before it starts to suck up this market as well …

  • http://www.digafriend.lv Iepazisanas

    Groupon must be realy crazy to trn down offer google made:(

  • http://www.localbiznovascotia.com Paul – Local biz Nova Scotia

    I wonder what they were thinking. 6 billion was alot of money!
    If google is half as successful as they think …that 6 billion will be 3 before long.

  • http://www.sonntag.ca Galen Sonntag

    Google will be the eventual leader. They have all the right weapons, most importantly the search traffic, and the customer base of AdWords to grow this out quickly. If Google offers to buy you, say yes. Or they buy or build your competition and eventually be the category leader.

    Galen Sonntag
    Sonntag Search Marketing

    • http://bloggingpark.com Blogging Park

      Don’t forget when Google will try to do this,downing the Groupon forcefully,they will be more popular.You are talking about search traffic and advertising,Google has more competitor in this area,they will love to highlights groupon.

  • http://earnmybusiness.com Jeffrey Taylor

    Couponing is powerful and been around forever. Women love coupons and they will be around. Group on was smart and found a powerful way to get coupons to the masses via the web, text, and email. This is not a trend!

    The problem with Google is they have never been good at customer service. Group On and Living Social rely mostly on Women that are looking for deals when they need something, or that buy something they don’t really need because of a deal. That is the power of perceived good deals!

    You need to build strong relationships with the businesses and the end users. That may be Google’s failing point. They certainly have the platform to take it to the market. Google has never been known to give great customer service.

    The problem is… businesses are willing to give discounts, but may not want to use 3 services. Many of their offers are not very profitable just geared to create repeat business.

    Second… Women are used to Group On and it may be hard to move them to Google. Group on is becoming a household name.

    This is a good thing for small businesses because competition for their business will lead to these coupon services giving them better deals resulting in better profits per coupon offer.

    My gut feeling is that Google because of their lack of people skills and customer service etiquette will not overtake Group on.

  • Suz

    They should have taken the $6bil and run laughing after the expose in the UK. Groupon fraud will begin to run rife through out the UK and has probably been running rampant in the US as well for a while now. The moment I saw it on BBC I could see the grubby fraud goldmine potential…

  • http://wpidx.com Nic Turner

    Google will dwindle down the value of Groupon over a few years. Then the offer from Google will be based on closing down the competition rather than an out-of-the-box opportunity for Google to build on. Dollars flying out the window

  • http://www.paulsidahohomes.com Paul Heim

    Google sure has the clout and following, question will be; will they be offering th same deals daily? I newly discovered Groupon and of course only buy what interests me. If one day that offer comes from Groupon I will buy it, if from Google then I would buy that. Might be room for both but I do believe Google Offers will have success.

  • http://www.bluelightit.com PC repair Boca Raton

    Groupon is very selective in which offers they accept. I have a few customers that have legit companies, yet groupon constantly decline their requests with lame excuses. Hopefully Offers will be less selective

  • Dev

    Google will definitely take over these expensive ad dealers .

    I like google as it offered me free Landing pages/ map pages for my websites.

    Google has lot more to offer at cheaper rates or free to all

  • Paddy Reagan

    Groupon and its competitors are meteors, not comets. Their bright lights will fade away soon enough just as cash rebates did a few years ago. Here’s why: Prices of goods and services, at least in well managed companies, are based on margin and ROI targets. Promotions can be used to introduce products to new customers and to inflate sales during weak periods of annual sales cycles. But, promotions can also distort those cycles, stealing sales from the future. Later, when the high ends of the cycles don’t perform as usual, there’s a tendency to introduce more promotions. In categories such as entertainment, that’s a dangerous move. No matter how many promotions are in place, customers will only go horseback riding or kayaking so many times. Restaurants with diners who pay discounted prices every time they visit feel the pain very quickly. In package goods and other inventory based businesses, too much promotion can lower the perceived value of the brand. If you need an average price of $1.00 to maintain profitability and the market sees your promotional price of 80 cents too often, they’ll refuse your dollar offering and either buy volume when your price is low or simply wait until the next promotion.

    In a year, Groupon el al will be around but will see its own, over stimulated market diminish. When that happens the $6 billion offer will seem enormous!

  • http://www.dofollowuntacticcal000.com frank burns

    Groupon or Google
    I would like to think that Google will outdo Groupon because after the $6 Billion offer to buy them out, there is a odor in the air that the company owners are a bit cocky? You never quite catch up in the business world when you decline a ‘Good Offer’ and what we can hope to expect, is that RetailMeNot will decline as time goes by.

    In any event, there are a few valuable tips that Google can benefit from by watching what others do, and (with no royalties or commissions in sight), I do wish Google well.

  • https://www.searchen.com domainer

    I think Groupon should have taken the offer. In my opinion, it wouldn’t be a bad idea to find out how much smaller of an offer is still on the table, as it may not be too late. It appears, at least to me, that Google is at the very beginning stages of becoming the dominant player in local reach. At the end of the day, in almost every change seen, aside from maybe Facebook (the single most significant threat), Google seems to be the ‘buzz’ word, and is unlikely to change much in the coming years.

  • http://www.athomecoupons.com/ Elliot

    I think Groupon made a mistake turning down the $6Bil. A couple of years ago I registered the domain http://www.athomecoupons.com/ to get into this space, and I believe there is still one piece of technology they’re missing to really make this work. Internet marketers are now selling all kinds of programs promising to make you rich if you buy their products on how to setup and offer to local merchants. You can make an offer to buy my domain (I’ll take less than $6Bil and through in for free the “missing link”).

    So, yes, Groupon is in trouble. Fortunately, however, it’s a big space.

  • http://lazerwebhosting.com Kathy Pop

    I think that unfortunately that Google has the resources and funding to out market Groupons. I think Google will be a leader in that market as they are in others. But I also think it will be short lived as other companies have experienced when they grew too fast. I hope that they can keep up the customer service that these other companies have. Have you tried to call Google with a problem?? They don’t make it easy to contact them and that could be their downfall.

  • http://www.sensoryedge.com Ed

    I’m sure the powers at Groupon had good reasons to turn down Google’s offer. However, I’m not sure that was a smart move. Business owners have to have an eventual return on investment and the life time value of a customer simply does not work for all businesses. Will Groupon turn into another Woot or Overstock, or can they keep convincing restaurants and vacation spots to deeply discount?

  • http://www.insertwebsitehere.net/ Gareth

    This is only really going one way, and it’s the same way everything involving Google goes (or at least 70+% of the time): in Google’s favor.

    As the article has noted, they’ve already got a massive foothold in local and they can leverage all their strength and presence to do what Groupon doesn’t yet have the ability to do.

    I think Groupon will be around long term, but Google Offers will certainly move to the fore.

  • http://www.authentic-pr.com Dustin C. Parker

    Previously said by other members Groupon should have sold! It will be interesting to see what happens!

  • http://www.localdealsites.com/ cogrep

    I’m excited to see what Google will do in this space. They obviously have lots of resources and potential, but I think it will be awhile before they are really able to compete with Groupon or LivingSocial. Hopefully they will be able to offer something that’s unique or different… seems like almost all of the daily deal sites operate in the same Groupon model with little variation. Since the ‘Groupon’ concept is so well known now, I’m sure they are hoping they can find a way to have businesses come to them (like they do for Adwords) rather than having to staff up a huge salesforce like Groupon has.

    I started LocalDealSites.com as a daily deal site directory, currently with 159 sites and the ability to filter by city. If you love daily deals, check it out: http://www.localdealsites.com

  • http://www.brickmarketing.com/website-internet-marketing.htm Nick Stamoulis

    One of the biggest things Google has working in its favor for their new Deals program is that they already have a massive user network. They aren’t a new start-up that has to gain popularity. Their target audience is already lined up. All the negative press going out about Groupon isn’t helping Groupon hold on to their market share. But the question at the end of the day isn’t which service companies like more, it’s which one do the consumers turn to.

    • Kamakshi Sri

      That’s it and users take GroupOn granted for deals.

  • http://www.webartistuk.com Ecommerce web design

    I cant believe the company didnt sell, thats just an outragiouse ammount of money to turn down

    • Kamakshi Sri

      Bcoz GroupOn wants to be killed rather than surrendering because it knows that it can’t be so easily killed either by Google or by FaceBook. Google dominates search, facebook dominates the social sphere and in the same way GroupOn dominates the daily deal industry. Changing time can bring out changed results, I understand but so far all of them have appeared to be entering each others industry yet did not succeed completely. Both Google and FaceBook will take time to overtake GroupOn and may be by that time GroupOn would suceeding in keeping these two out of the industry or just leave a thin line for them.

      Users are human beings and more guarded by their hearts rather than their heads. People understand GroupOn for deals.

      It’s not about money only, it is about the life of a company. GroupOn wants to live till it dies. So, let it!!!

  • Shay

    “Groupon just got a new $6 million infusion of capital” – LOL Google is already $6 billion ahead! If its a case of how much you have to spend, then Google is way ahead already. Now its a case of lets see how long Groupon will last.

  • Kamakshi Sri

    Though Google seems too big a rival to GroupOn but the event of ever pushing out GroupOn is at a far distance. Why? Because Google is new to deals. The same is applicable to FaceBook too. Agreed that it would be difficult for GroupOn as the competition is going to be too heavy. But Google has less chances of overtaking GroupOn until it partners with Foursquare and till then GroupOn is safe.

  • http://blog.perfectvisualhost.com Perfect

    Well, this is an interesting scenario to watch.

  • http://www.hedgehogdigital.co.uk/ SEO Bedford

    Given the past social failures of other Google products it is hard to say if Google Offers will be a success.

  • http://www.sweetparties.co.uk Bouncy Castle

    Groupon may regret not taking the 6 million, google will be a massive competitor.

  • Saeed

    Let me get this right, Groupon declined $6 billions for a business concept that is not proprietary and no barriers for entry. Heck, I am not a geek, I could get some brains stationed in India to replicate Groupon with have my data farm in Google fiber heaven, Kansas,KS. Those guys must have drank too much of their Jim Jones Cool Aid.

  • http://www.tabletpcunion.com tabletpcunion

    Google has a good edge on his side. So Groupon is facing a big competitor.

  • Kim

    All these discounts sites seem to only care about making money for themselves and not for the merchant. Sure when you discount a product you are cutting into the profit margin but you shouldn’t have to discount at a risk of making a loss.

    I’m grateful a friend told me about a site that promotes to their membership for FREE. this company has a unique way of marketing to their membership and helping them to connect and find great deals.

    Oh yeah the site is called totet. (strange name)

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