Why Does Everyone Love Groupon?

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Cartoon site Oatmeal released their State of the Web a while back, and it included a bit about the deal-a-day site Groupon.

So true! But who doesn’t like a deal. 🙂 Their customer service is solid too, I had a problem with a local Groupon recently and they refunded it immediately without hassle. I don’t quite get how they’re worth $15 billion, but who knows. Here’s another spot-on Oatmeal observation about websites for restaurants.

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  1. There are so many competitors now. In the beginning I was a big fan of Groupon – I still am, but I just don’t buy as much as I did before. Unless it’s for something really remarkable.

  2. Bobby White says

    The places that Groupon recommends for dinner is usually not that good. I’ve tried 3 deals on meals and they all are so so.. So I gave up on groupon. For me, the chance of really getting a deal seems to be pretty small. You are right, it is inflated 😀

  3. @Nicky – Part of it is that businesses should really think out their Groupon ad campaign, because that’s what is. They know upfront that Groupon gets a 30% cut or so of the gross, and they’re already offering 50% or so off. Most businesses are trying to break even and rely on future visits for profits. If you aren’t at least breaking even, then I would say don’t do it.

    After that, I would say 1/3rd of the businesses I went to aren’t very good in the first place, and so I wouldn’t come back. 1/3rd I already go to, so no real added profit from me. But about 1/3rd are new businesses that I now would buy from again.

    In general, I think that they would do well to limit the number of Groupons sold for small businesses that can’t handle thousands of people trying to redeem their discounts. Even after waiting for a couple months, I couldn’t redeem my Groupon so I asked for a refund.

  4. @Well Heeled – I think Groupon’s biggest positive is that they are the *first* place that a business that is thinking about doing such a discount would go to. Chances are if you own ABC Salon, you just want to use one Groupon-like site and that’s it. But $15B? Whew.

  5. I think the biggest reason GroupOn’s valuation is so inflated is that they are the only Web 2.0 DotCom that actually has a solid revenue model without carrying inventory. It’s like 1999, but with a chance that they’ll actually get paid.

    Remember, the valuation doesn’t really depend on numbers. It depends on those Honest-Abes over at Goldman, who now have a financial incentive to talk up the price.

  6. Groupon is doing well right now but it’s a fad. You can already see that very few businesses are repeating on their site. I give them until the end of the year and their daily deal in many areas starts turning into a weekly deal because demand begins to drop. 50% is a huge cut when businesses are already offering 50% off or similar. Someone will undercut them. Remember MySpace? The second-comers like Facebook almost always do it better.

  7. The valuation I saw was $25 billion! Crazy days.

  8. I dated someone who worked for Groupon in their customer care department. They will always give you a refund if you’re unsatisfied–even if you’ve already used the Groupon.

    I’ll echo earlier comments that I don’t visit the site much anymore. They now always have multiple deals for multiple locations, which are often available for sale over multiple days. It’s just too much. Simplicity was the key to Groupon’s early success, I think.

  9. I see a lot of repeats from Blockbuster Express, Redbox and others. Those tend to be deals that are national.

    Part of using Groupon is that it gives people a low-cost way to try business. Therefore, I don’t expect that much repeating of deals. Why repeat a bargain offer to try your business?

  10. Like the idea that buying a Groupon forces you to try different places. However, I’m not a big fan of spending money and online shopping in general.

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