Groupon hopes to raise $750M in IPO

ucacm · Aug 18, 2012

I don't understand most of the "deals" on Groupon. Most of the time it is complete and utter crap marked up and then marked down. Or stuff you can find cheaper other places.

There is a cool new smart phone app in a few larger cities called ScoutMob. I think its business model seems a little bit more sustainable. First, it is completely free to the user. Restaurants and businesses sign up and have to give at least a 50% discount, but they can cap the discount at X amount of dollars. So, for example, a restaurant can sign up and say 50% off, but with an $8 maximum discount. Then, when someone redeems the offer, they just show the cell phone to their waiter and press a button on their screen to use the deal. The restaurant then pays a small referral fee to ScoutMob for the customer.

I can't believe any smart investor would have purchased Groupon stock. The business model is wayyyyyy too easy for competitors to replicate.

Moderator1 · Aug 18, 2012

Groupon and Living Social have been great, in my limited experience. There's also Amazon Local and Google Offers, at least around here. Haven't used them much.

Groupalicious has been a nightmare. Won't use it anymore.

I found a mechanic locally through Groupon. He will definitely get some repeat business. The others were for things/places I enjoyed but would not go back without the discount. So, yeah, I'm not sure it is a good thing for most businesses.

YankeeFan · Aug 18, 2012

As their e-mail in-boxes filled with daily deal offers from Web sites like Groupon, Lea Pische and Edwin Hermawan, a pizzeria waitress and a former lawyer living on the Lower East Side, finally decided to buy one: a discounted Skillshare class on how to start a business.

Their business plan? It was a service that would unsubscribe people from all those daily deal e-mails.

Three months after its introduction, UnsubscribeDeals.com has 7,800 unsubscribers, a number that nearly doubled in the last month. Ms. Pische and Mr. Hermawan tapped into deal fatigue, a malady that has been afflicting the small businesses that offer daily deals and is now hitting consumers too.

Daily deal services — like Groupon, LivingSocial and Google Offers — took off because they seemed to offer something for everyone: small businesses got a novel way to bring new customers in the door, shoppers got a discount and the deal providers got a large cut of every sale.

But signs of deal fatigue are everywhere, raising questions about whether Groupon and its competitors can continue their hyper-growth.

In the last six months of 2011, 798 daily deal sites shut down, according to Daily Deal Media, which researches the industry.

When Groupon reported its second-quarter results this week, it said that active customers — defined as people who purchased a Groupon deal in the last year — grew just 1.1 percentage points, a significant slowdown from customer growth rates in previous quarters. While traffic to Groupon was higher at the beginning of 2012 than last year, it was down almost 10 percent in May and June from the same months in 2011, according to comScore.

Shares of Groupon have fallen 82 percent since it went public in November, and the company is now worth just $3 billion, half of what Google offered to buy it for in 2010.

http://www.nytimes.com/2012/08/18/technology/merchants-and-shoppers-sour-on-daily-deal-sites-like-groupon.html?hp
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Oof. They should have cashed out.

YankeeFan · Aug 18, 2012

And, this goes to the heart of the problem for businesses:

Though small businesses were excited at first about a new way to attract customers in a post-Yellow Pages world, many soon soured on the daily deals. Customers who bought deals overwhelmed the businesses, spent the bare minimum and never returned.

The scene on a three-block stretch of Mississippi Avenue in Portland, Ore., is a snapshot of what is happening nationally, as merchants grow increasingly wary of daily deal services even as more daily deal salespeople try to court them.

Muddy’s Coffeehouse, which serves coffee and granola in a purple-trimmed Victorian home, offered $24 of food and coffee for $12. It paid Groupon half of that. Muddy’s succeeded in drawing crowds — but ended up losing money.

“I pretty much had to take a loan out to cover the loss, or we would have probably had to close,” the owner, Dyer Price, said. “They don’t warn you that you’re going to get hit really hard and that you have to be prepared. We will never, ever do it again.”

A few doors down, Mississippi Studios & Bar Bar, a former Baptist church that became a live music club and burger and cocktail restaurant, offered a Groupon deal but said it slowed down the bartender, who had to complete paperwork for each coupon, and brought in customers who did not return.

“It was a huge boondoggle for us, and we were counting down the days until it was over,” said Kevin Cradock, co-owner of Mississippi Studios. He said he had a better solution for local advertising. “We still do the old-school thing,” he said. “We print these posters and hire kids on bikes to put the posters up.”
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TheSportsPredictor · Sep 22, 2015

Took awhile, but winter is coming. Current value is 4.08/share:

Groupon cutting 1,100 jobs, shutting down operations in 7 countries

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Groupon hopes to raise $750M in IPO

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Groupon hopes to raise $750M in IPO

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