Tag: groupon

Will Google Deals be the next service to join the graveyard?

Google Deals was an attempt to compete with group buying services like Groupon, that experiment has failed and another tombstone for Google’s Graveyard should be on order.

Google’s graveyard of discontinued services is getting crowded, with Google Reader being one of a dozen services to bite the dust in last week’s springclean.

As Google ruthlessly cut services that don’t make the grade, the question is ‘which ones are next’?

Towards the top of the list has to be Google Offers, the group buying service that was set up in a fit of pique after Groupon spurned the search engine giant’s $6 billion acquisition offer.

Google Offers has only rolled out in 45 locations across the United States over the last two years and the deals in recent times have become increasingly desperate, here’s a recent New York deal.

an example of how Google offers is dying

Schmakery’s Cookies may well be fine products, but getting one free cookie isn’t exactly a jump out of your seat experience and it shows just how Google are struggling with this service.

That Google are struggling with Offers isn’t surprising though, the daily deals business relies on sales teams working hard to acquire small business advertisers. Small business is a sector that Google struggles with and running people focused operations is the not the company’s strong point either.

Google’s exit from the group buying market may be good for Groupon and other companies in the sector. The Economist makes the point that Google’s presence in these markets distorts the sector for other incumbents while scaring investors and innovators away.

This is rarely permanent though as companies like Google and Microsoft often suffer a form of corporate Attention Deficit Disorder – Knol is a good example of this and Seth Godin describes what happens “when the 800 pound gorilla arrives”.

Eventually the 800 pound gorilla finds there aren’t a lot of bananas, gets bored and wanders off.

Which is what has happened with RSS feeds and Google reader. Now the little guys can get back to building new products on  open RSS platform while Google, along with Facebook and Twitter, try to lock their data away.

For Groupon, the departure of Google from the deals business may not be good news as it could mean smart new competitors enter the field. Either way, there’s some challenges ahead for the owners of group buying services.

Similar posts:

You call that a graph?

A good chart can help tell a story, all too often though graphs are designed to mislead.

One way to illustrate a story is with charts. All too often though misleading graphs are used to make an incorrect point.

A Verge story on Groupon shows how to get graphs right – clear, simple and tells the story of how the group buying service’s valuation soared and then plunged while it has never really been profitable.

The vertical axis is the key to getting a graph right, cutting off most of the y-axis’ range is an easy way to mislead people with graphs. In this case you can see just the extent of Groupon’s valuation, profit and loss over the company’s short but troubled history.

Since its inception, The Verge has been showing other sites how to tell stories online, their Scamworld story exposing the world of affiliate internet marketing sets the bar.

Using graphs well is another area where The Verge is showing the rest of the media – including newspapers – how to do things well.

For Groupon, things don’t look so good. As The Verge story points out, the company’s income largely tracked its workforce which grew from 126 at the start of 2010 to over 5,000 by April of 2011. Which illustrates how the business was tied into sales teams generating turnover.

The spectacular growth of Groupon and other copycat businesses couldn’t last and hasn’t. The challenge for Groupon’s managers is to now build a sustainable business.

For investors, those graphs of Groupon’s growth were a compelling story. Which is another reason why we all need to take care with what we think the charts tell us.

Graph image courtesy of Striker_72 on SXC.HU

Similar posts:

Group buying: A boom gone bust?

Has the heat gone out of the group buying market?

I’d forgotten I had appeared in this segment on India’s Economic Times about the end of the group buying boom.

While the group buying boom may have come to an end, it’s still a useful tool. Hopefully we’ll see businesses using it cleverly rather than offering silly and suicidal deals.

Similar posts:

Fleeing the group buying market

The air deflates from the group buying bubble

As Apple becomes the highest capitalised stock in US market history, former daily deals site and market darling Groupon continues to sink into misery.

Groupon led the group buying mania of 2011 and its stock market float in November of that year valued the business at 13 billion dollars, ten months later the business has a capitalisation of three billion, wiping out three quarters of its IPO shareholders’ investment.

To make matters worse for the daily deals site the New York Times features a story looking at deal fatigue, where customers tire of the daily emails offering discounted cafe meals or personal training while businesses find the deals just aren’t worth the trouble.

“I pretty much had to take a loan out to cover the loss, or we would have probably had to close,” the Times quotes Dyer Price, owner of Muddy’s Coffehouse in Portland, Oregon. “We will never, ever do it again”

In a straw poll, the Times correspondent visited neighbouring businesses who had similar stories.

The common factor with all the business horror stories surrounding group buying or deal of the day sites is high pressure sales tactics that blind the merchant to the downsides of these offers.

For these services, it’s essential to move through as many deals as possible so salespeople are driven to sign up as many merchants as possible. When you put pressure on sales teams, they tend to behave in ways that aren’t always good for customers.

Most of the customers Groupon attracts – or those of other deal of the day sites – are price sensitive and fussy. Having demanded their deal, most of these customers are not coming back so it may well be that daily deals are the most expensive, disruptive and pointless marketing channel ever invented.

The results of the high pressure tactics are shown in a Venture Beat story which claims Groupon is now threatening to sue unhappy merchants as payments slow and the daily deals struggle to attract customers.

What was always misunderstood during the group buying mania was that Deal Of The Day sites weren’t really technology plays – they were reliant on good sales teams driving deals. The technology being used was incidental to the core business concept.

In this respect, services like Groupon had more in common with the Yellow Pages or multi-level marketing schemes. It was about salespeople delivering orders and taking a percentage off the top.  To compare Groupon with Google, Facebook or any tech start up was really missing the point.

This isn’t to say that group buying or deals of the day services don’t have a role in business. For retailers clearing inventory, hotels working around quiet periods or new businesses wanting to get attention in a crowded marketplace, there’s an argument for offering a deal on one of these sites.

For most though it was an expensive and pointless exercise that attracted the picky, price sensitive customers that most business would avoid rather than encourage. That’s the harsh lesson learned by many of the businesses who fell Groupon’s fast talking salesteams.

Similar posts:

What business can learn from Groupon

How can businesses use the web to grow like the group buying companies?

Groupon, pioneer of group buying and one the fastest growing companies in history, will have its launch on the stock markets today with an initial public offering (IPO) that’s values the business at thirteen billion dollars, more double the $6bn that Google offered for the three year old company last year.

A recent Business Insider profile of Groupon had some fascinating insights on this unique company and its growth, there’s a number of lessons that most business owners, entrepreneurs and managers can take from this company’s dramatic growth and market leadership regardless of the sector they operate in.

Apply tech to your business

Many people make the mistake that Groupon is tech startup when it’s actually a sales operation.

Groupon’s business model isn’t really new, what they have done is applied various web technologies to the directory and voucher shopping industries and come up with a 21st Century way of doing things.

Bringing together different modern tools like social media, cloud computing, local search and the mobile web makes businesses more flexible and quick to develop new market opportunities.

Prepare for quick changes

Groupon was born out of another business – The Point. As The Point steadily died, Andrew Mason and his mentor Eric Lefkofsky decided to try something different and Groupon was born.

This ability to change focus quickly – often called “pivoting” – is essential in changing markets. In volatile times like today where today’s business conditions can’t be taken for granted we have to be prepared for rapid changes.

Fortunately the cost and time to changes your business focus has dropped dramatically with digital and online tools, which is another reason to embrace tech.

Get a good business mentor

Eric Lefkofsky bought maturity and a perspective to Groupon’s young leadership, having a different and more experienced view of the business helped it develop and grab the opportunity.

An experienced business mentor can be worth their weight in gold.

Back a good idea

In Nicholas Carson’s Business Insider profile he describes Andrew Mason role at Eric Lefkofski’s business before The Point as “an intern, ‘kind of squatting in their offices'”. Lefkofski was prepared to back the geeky kid camping on his premises.

Putting your prejudices and judgements on the shelf to back good ideas, particularly those that don’t cost much to execute, is one way to find where the opportunities lie.

Tell your business story

Regardless of what you think of Groupon’s claims, they tell a very good story which has lead to their amazing growth and the development of the group buying industry.

Being able to tell your story, in your terms, is one of the great advantages the web, local search and social media deliver. There’s no reason why your business shouldn’t be dominating the local market in whatever field you work in.

Regardless of what your business does, it can benefit from applying the online tools that are available to all of us.

We may not be the next Groupon but the web gives us the opportunity to build our business to take advantage of the 21st Century. It’s worthwhile understanding the new tools at our fingertips.

Similar posts: