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Groupon: We’re the Savior for Small Businesses

Groupon Wants To Do For Local Businesses What Amazon Did For Buying Products

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Legend has it that Groupon turned down a $6 billion offer from Google, which if accepted would have been Google’s biggest acquisition to date. Time will tell if this was a smart move or not, but Andrew Mason, Groupon’s CEO seems fairly confident in the company’s future.

Do you think Groupon will remain independent? Will the Internet giants be able to contend?
 Comment here.

Mason recently appeared on Charlie Rose, who asked him about the offer. He declined to talk about it specifically, but did offer this response: "I think every choice we make in the company comes down to a core of this idea we have of what Groupon could be, and the place it could play in the world in the rest of the 21st century, and every choice that we make is which option will make it more possible for us to get there. So I think whatever we decide to do with the company – the people that we hire, the deals that we run – every itty bitty choice is how do we build this company into something that transforms the way people buy from local businesses?"

Rose asked if the decision had been influenced by decisions Facebook had made, to which Mason responded: "I can’t talk about this Charlie. You can’t talk about all kinds of things largely because for the same reason that every person you go on a date with…you don’t bring them home to your parents right away."

Mason said that the company, which began as nothing more than a side project is adding about 30 cities a month in 35 countries, has 40 million subscribers, and just added 3 million subscribers the previous week. 

Can Groupon Become the Next Amazon?

Mason said he wants Groupon to change the way people buy from local businesses like Amazon changed how they buy products, and told Rose, "The discount is this great trick that we’re playing on people because we’re tricking them into getting out of the house and live their lives, because it’s there for one day. It’s like, ‘I’ve always wanted to go skydiving. If I’m gonna do it, I might as well do it now because it’s never gonna be cheaper,’ so we finally get people to commit and get off the couch and go out and have some fun."

Of course Amazon might wish to be that company too. The company recently invested 175 million into LivingSocial, one of Groupon’s biggest competitors. 

LivingSocial vs Groupon  - Data from Hitwise

The Savior for Small Businesses?

Mason said Groupon was able to give one business half the number of customers in one day that the business had previously had in the previous 25 years combined. That’s quite a feat, and the kind of power that would make such a large price tag from Google seem pretty legit. 

"We’re the savior for small businesses," Mason told Rose. "For consumers, we want to reverse this trend of spending more and more time on the computer, and help people rediscover their cities." He Later added, "We found a way to make the coupon cool."

Mason is well aware of the Groupon copycats out there, but appears satisfied with the large lead it has in the market, the rate of expansion, and the company’s focus on what it does. 

For right now, it looks like Groupon will have some pretty fierce competition from some bigger players it hasn’t really had to contend with much yet, however. Google, Facebook, and Amazon are all going to want a piece of this pie, and all have a great deal of resources and sway over consumer habits on the web itself. 2011 is going to be a most intriguing year for local business deals. 

Watch the entire interview here. Mason’s a pretty funny guy. 

Do you think Groupon is the savior for small businesses? Tell us what you think

Groupon: We’re the Savior for Small Businesses
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  • http://www.spekios.com Henrique

    I think one of the biggest problems Groupon faces is the so called “competition” it has from othes clones. At it’s core, Groupon is really just a one-page site with a daily deal. There’s no real commitment or loyalty from its users to continue using Groupon. Groupon, just like its clones, has no real added value once it has a user’s email. Whatever Groupon offers me, can be offered by other coupon sites. My point being that at this point, and as a user, it makes absolutely no difference to me if I get en email from Groupon or LivingSocial telling me about a daily deal, since I’m after the deal itself. With all of these clones coming up, Groupon’s model runs the risk of becoming a commodity.

    • Chris Crum

      They’ll definitely have to continue to offer deals that people want, and listening to Mason talk to Rose, it sounds like they put a lot of consideration into this.

  • http://www.magnews.it/en Maurizio Fionda

    This is an email-marketing application, even as a commodity it may turn to a global market with one strong player as it happen in the search industry or in the desktop market.

  • Guest

    If you’re looking for a Groupon-like opportunity but don’t want to start big, you could try one of the smaller players. LocalDealSites.com lists over 130 Groupon-like daily deal websites and lets you filter by city so you can see which sites have offers in your area. Many will take less in commissions than Groupon. http://www.localdealsites.com/

  • Rory R.

    The group buying trend has been advantageous to both consumers and small businesses. With the increasing number of deals available, buyers can just visit a daily deal aggregator like http://www.shopway.com to check all the deals easily. It

  • http://usasavingsclub.com Terry Mowery

    The only businesses that can afford the 75% hit in their profits are service businesses. The will always be a marginal advertising venue. Until they can deal with Real local businesses, they will not succeed over the long haul. How many pilates classes and skydiving lessons can someone take?

    Additionally, the aggregators like Yipit will dissipate the tenuous loyalty to Groupon and the clones. With hundreds of daily deal flooding the inboxes. The consumer will Group-OFF.

    My company deals with local fundraisers i.e. schools, churches, sports teams and charities who raise money by distributing a FREE Discount program. When one of their members buy something the local merchant makes a donation to the referring fundraiser. The discount is 10% and the donation is 5%. 15% total not 75%! We have hundreds of merchants participating locally and thousands nationally.

    All my merchants are local to the cardholder and are a lot more likely to return for a second purchase. The cardholder is motivated by the discount but also the donation to their kid’s little league or school.

    My business model is the perfect match of fundraiser – merchant – family. We save families money – increase local merchant profits – raise thousands of dollars for worthwhile organizations.

    • http://usasavingsclub.com Terry Mowery

      I do not list my website http://usasavingsclub.com.

  • http://www.jafose.com will

    I must say, I am in a cloud as I never heard of groupon until recent so i joined up to offer 50% off our advertising. We received a notice from groupon that our ads was rejected and wouldn’t be posted in the future but i can promote my ad to my followers. Ok, so let me get this straight, i have to pay groupon 10% and I have to market their site to get followers. It seems groupon selects only what benefits them i guess so i would say it is geared toward storefronts only, i told groupon where they can shove my account. My experince with groupon was the worst ever so we decided to open our own at www.modlowarvai.com and post our own deals that we don’t have to be rejected.

  • http://www.pamcote.com Guest

    Love Groupon. Know it helps business as I have used it for business to give to my clients. The landscaping company said that they were swamped with new business. I will use them again & will spread the word about them. My client was also impressed with the quality of their work & said they would tell others.

  • http://www.ellefagan.com Elle Fagan

    In response to your question, “…able to contend?” The dynamic is symbiosis, not contention. They lose visitors when they create negative karma. I must think in terms of how they may be able to help me.

    I WAS disabled but am jogging about again and even skated yesterday after a thing that might have paralyzed me – triumph! However, my honored little arts business stopped cold dead while I was becoming legally NOTdisabled.

    Each day I am doing a few things to get things going right and Groupon might be one of them.

    I know I signed up.
    And will give it some study to see how it might do the trick for me, thanks to your article here.

    I also watched the interview. Yes, it made a difference.
    Thank you for featuring this “possible” for me.

    e.
    ellefagan.com

  • Angelo

    Although it seemd like the hottest thing at the moment i can’t see how Groupon can sustain this type of growth considering they are taking away 75% of their advertisers profits. There is NO guarantee that people purchasing these deals will be repeat customers as they are only after the deal itself. Businesses, small businesses in particular cannot afford to run deals like this every so often as it will kill their businesses.

    I see someone coming up with a business model somewhat similar to Groupon, with the same outcome but costing a lot less for businesses and helping the local communities as well.

    • BizOwner

      Even in the Charlie Rose interview it’s apparent. “If we’re ever going to go skydiving we might as well go do it now because it’s never going to be cheaper.” Well how does that work out for the skydiving company? Sure they have more customers than they’ve ever had. They’re basically working for free and breaking even. It’s unsustainable. They’re giving away the farm. How many are going to come back and be repeat skydiving customers? Very few. I see friends and family using Groupons. They drive out of their way, spend on something unusual, and basically do things they ***wouldn’t do otherwise*** to get the deal. Then they move on to another Groupon for a different business. It’s an old business trap in a new guise: Q – How can you afford to lose money or break even on these incredible prices? A – We make it up in volume!!

      No dummy you lose money in volume.

  • http://www.ferreemoney.com Ferree Money

    If they do things right and they have thus far, then yeah, Groupon could remain independent. Albeit, Google is not one to take NO lightly once they have an asset on their radar. The guys from LocalDealSites seem to be contrary to conventional wisdom on this, suffice to say that those who want to make money online need a little http://www.FerreeMoney.com in their mix.

  • http://www.bottres.com/ Dusan

    Yes, I think tha Groupon will continue indipendent ,Google can not be owner of all main websites on the net,If you are the rich ,that does’not mean that you have to control all segments in business or life,world is different ,people are different.

  • Robyn

    It’s time for the “little” guy to rise above the others!
    Keeping it in the family is best for Groupon and all that
    made it what it is! HOORAY for Groupon!

  • http://www.interiorsbykrristina.biz/ Guest

    YES if Groupon will expand to more industries. I am an interior decorator rejected by Groupon. Interviewing recruiter said home decorating creates too much burden. They are looking for something quick and easy.

  • http://www.webincomenews.com Kingsley

    Many people never heard about groupon…I never heard until recent offer by google. Hope with much attention only positive news come their way. There will be a lot of dirt digging now that it is so competitive to the giants.

  • http://morganservice.net Don Morgan

    The Savior?

  • http://www.ebookcafe.biz/free.htm Alfred

    Good on you Mason! All the best with your venture. I wish you high success!

  • http://www.hypnosissydney.net.au Alfred Bellanti

    Thank you Mason. In these days of economic uncertainty small businesses need a savior!

  • http://www.lombardchamber.com Yvonne Invergo

    I think if you want to stay above the “soon to be” big contenders, you might consider partnering early on with Chambers of Commerce in some way. Many small businesses are local Chamber members, and to have their chamber back up and partner with Groupon might make them more likely to participate. Just a thought…

  • Mat Weller

    I think ‘savior’ is the wrong word. I think it’s probably also a terrible indicator of our world when words like ‘savior’ ‘saint’ and ‘messiah’ are thrown out to describe a successful business man that is not punch-grandma-in-the-face-for-a-dime greedy.

    Let’s be honest, $2 million is more than 98% of the people in the world will make in their entire lifetimes. Anyone who gets more than that in the bank at any one time and thinks they need more is pretty disgustingly egotistical and needs to think of the damper they’ve put on their company’s growth and the the deserving people they’ve shorted for their own gain.

    I think it’s safe to say Groupon is successful enough that Mr. Mason should be to that point now, and it’s refreshing that he cares more about staying true to his vision and the company built around it than he does about lining his own pockets.

    I salute you, Mr. Mason. I would have done the same, and God-willing, if I ever get up there I promise to. Hopefully others will learn that true success is elevating as many people with you as possible.

  • http://www.roostertfeathers.com Beth

    We are a small comedy club in Silicon Valley and have run 2 Groupon deals to date. We have been thrilled with the response. With our business model we can offer deeply discounted admission on Groupon and still make money on the food and drinks people order when they come to see a show, so everyone’s a winner. Our Groupon rep and the support team have always been very responsive and it has been a very positive experience.

    I have concerns, however, about the proliferation of clones and the sustainability of the model in general. Groupon works by creating artificial scarcity, but when there are a hundred daily deal sites the sense of urgency to purchase Chinese restaurant (for example) vouchers within the next 24 hours is diminished.

    I would advise companies to give careful thought to which and how many deal sites to use. We’ve decided to be exclusive to Groupon so as not to dilute our brand, look desperate, or send the message that our admission is ‘over-priced’ to begin with. If you are working with Groupon, chances are you’ve signed an agreement limiting your ability to run other online deals for a specified timeframe, so also take care you’re not violating your contract if you are considering other offers.

  • http://www.ferreemoney.com JNFerree

    If Groupon can provide multiple rev streams for a creative small business, then a $15B IPO might actually be not so far fetched after all

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