By: Cynti Oshin
Director Client Services/Business Development
"Yesterday, Lisa asked if people would tire of coupons. Today it was announced that Howard Schultz, CEO of Starbucks, thinks not. He's just joined the Groupon board and his Seattle based venture capital company, Maveron, has invested an undisclosed sum in the company. The last time Schultz joined the board of a company in which Maveron invested was, well, eBay back in 1998. It quickly went public. Today, eBay's worth is somewhere in the universe of around $39 Billion. We'll check back in with you in 2023 to update you on the value of Groupon." February 10, 2011
It looks like I already have an update how things are going. Back in February, I wrote about the continued interest in coupons and specifically about the anticipated growth of Groupon with the backing of Howard Schultz. The question had arisen about whether consumers were tiring of coupons - and was this still a viable way to incentify trial and grow business. It was clear that Howard Schultz saw value in the Groupon model of doing so. Apparently, this specific coupon model isn't working out so well for consumers OR for businesses. There's quite a few bugs that need to be worked out. As a marketing strategy, this has proven to be a nightmare for some - the challenge to fulfill demand while still maintaining an acceptable margin has proven daunting. Further, it appears that those who are predisposed to using Groupon are not likely to become brand advocates and return. They're looking for the next best deal - not brand loyalists.
I promised to check back in with you in 2023 to update you on the success of Groupon. I'm checking back in just a little bit earlier. It's not doing so well. Its value has been dropped by 2 to 3 times in the last 6 months. That was as of last Friday. Uh oh.
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Consumers may not be but one has to wonder if retailers might be. That's big questions: If only large companies can afford to give Groupon (and it's customers) the deep discounting that Groupon demands how will the current structure benefit local business? If sm/med businesses aren't in the picture what does that do to Groupon's business model and hopes for longevity when large companies with already huge brand followers remember that they don't need huge discounts for retention once that fad dies down?
ReplyDeleteDid you try to use Groupon for your shop? If so, what was your experience? It looks like you've got beautiful, upscale bath products sold on line and through a single location here in Seattle.
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