Groupon
Encyclopedia
Groupon is a deal-of-the-day
website that features discounted gift certificates usable at local or national companies. Groupon was launched in November 2008, the first market for Groupon was Chicago, followed soon thereafter by Boston
, New York City
, and Toronto
. , Groupon serves more than 150 markets in North America and 100 markets in Europe, Asia and South America and has amassed 35 million registered users. In October 2011, a report from Forrester Research suggested that the Groupon business model was a "disaster", and that the firm had become an example of "how fast an Internet darling can fall."
The idea for Groupon was created by now-CEO and Pittsburgh
native Andrew Mason
. The idea subsequently gained the attention of his former employer, Eric Lefkofsky
, who provided $1 million in "seed money" to develop the idea. In April 2010, the company was valued at $1.35 billion. According to a report conducted by Groupon's marketing association and reported in Forbes Magazine, which was reported by the Wall Street Journal, Groupon is "projecting that the company is on pace to make $1 billion in sales faster than any other business, ever".
Groupon owns numerous international operations, all of which were originally deal-of-the-day services similar to it, but most of which were subsequently re-branded under the Groupon name after acquisition; these have included the European-based MyCityDeal
(17 May 2010), the South American ClanDescuento (22 June 2010), the Singaporean Beeconomic.com, the Japanese service Qpod.jp, Russian Darberry.ru (both on 17 August 2010).
Groupon has recently bought the Indian deal-of-the-day website SoSasta.com and will be re-branding it soon as well. The Groupon acquisitions of uBuyiBuy launched services under the Groupon name in Hong Kong, Singapore, the Philippines and Taiwan. Groupon also acquired GroupsMore.com in Malaysia to expand its business there.
Prior to these acquisitions, Groupon had bought out the mobile technology company Mob.ly. The Point, Inc., the predecessor to Groupon, bought the trademark "GROUP-ONS" from its originator in February 2009 under terms which allows the originator and first registrant of the trademark to continue the use of this trademark. In June 2011, Groupon filed with the SEC to raise up to $750 million in an initial public offering.
tools. Groupon makes money by keeping approximately half the money the customer pays for the coupon.
For example, an $80 massage could be purchased by the consumer for $40 and then Groupon and the retailer would split the $40. That is, the retailer gives a massage valued at $80 and gets approximately $20 from Groupon for it. And the consumer gets the massage, in this example, from the retailer for which they have paid $40 to Groupon. There are certain businesses to which Groupon will not offer its services, including shooting ranges, abortion clinics and strip clubs.
Unlike classified advertising
, the merchant does not pay any upfront cost to participate, Groupon collects personal information from willing consumers and then contacts only those consumers, primarily by daily email, who may possibly be interested in a particular product or service. Groupon breaks into new markets by identifying successful local businesses, first by sending in an advance squadron of employees to research the local market; when it finds a business with outstanding reviews, salespeople approach it and explain the model, and use social marketing sites such as Facebook
to further promote the idea.
Reflecting its focus on sales promotion, Groupon employs a sizable number of creative staff who draft descriptions for the deals featured by email and on the website. Groupon's promotional text for the 'deals' has been seen as a contributing factor to the popularity of the site, featuring a distinctive mix of thorough fact-checking and witty humor.
Owing to Groupon's market being primarily composed of female customers, the deals are often focused on the health, fitness and beauty markets.
There are potential problems with the business model. For example, a successful deal could temporarily swamp a small business with too many customers, risking a possibility that customers will be unsatisfied, or that there won't be enough product to meet the demand. Gap
, a large clothing retailer, was able to handle 445,000 coupons in a national deal (although it experienced server problems at one point), but a smaller business could become suddenly flooded with customers. One coffee shop
in Portland
struggled with an increase in customers for three months, when it sold close to 1,000 Groupons on the one day it was offered, according to one report. In response to similar problems, Groupon officials state that 'deal' subscriptions should be capped in advance to a reasonable number.
Many businesses thought that they would attract new customers by offering a very low offer price who would later turn into full paying customer. However, many cases the Groupon deal only attracted bargain hunters who never returned to the same business as a normal customer (i.e. paying standard price for the products or services).
, it is difficult for local merchants to get Groupon interested in agreeing to a particular deal. According to the Wall Street Journal, seven of every eight possible deals suggested by merchants were dismissed by Groupon.
The site has recently launched a mobile application available on Wap, Android, Blackberry, iPhone and Windows Phone 7. It allows users to buy deals on their phones and retrieve them using the screen as a coupon.
In February 2011, Groupon Russia announced it would join the Russian Company Mail.ru
in order to start offering deals on its social network Odnoklassniki. This way, users would be able to buy and share deals from Groupon on their profiles.
, Canada
, Taiwan
, Brazil
, Germany
, Greece
, Finland
, France
, the Netherlands
, Belgium
, the United Kingdom
, India
, Ireland
, Israel
, Italy
, Poland
, Portugal
, Spain
, Puerto Rico
, Japan
, Turkey
, Mexico
, Peru
, Chile
, Colombia
, South Korea
, Sweden
, Argentina
, the United Arab Emirates
, Norway
, Romania
, Singapore
, Malaysia, Hong Kong
, Mainland China
, Russia
and South Africa
.
In Australia, development of Groupon has been slow owing to legal disputes between Groupon and an Australian company, Scoopon. Groupon now operates in Australia as "Stardeals" while the legal problems are worked out.
On February 19, 2011 The Wall Street Journal
reported that Groupon was preparing to launch in China
.
Groupon is also expanding into the MENA region with its launch of Groupon UAE on June 16, 2011.
Groupon New Zealand launched on 10 May 2011 in conjunction with local Facebook tourism hub Gotta Love NZ. The New Zealand market is already crowded with over 50 deal sites active.
, has been described as a serious competitor; according to one estimate, it received an investment from Amazon
of $175 million. Other notable firms operating in the market include BuyWithMe
, Plum district
, Jasmere.com
, and Saveology
. Gilt Groupe
launched Gilt City, a Groupon competitor, in the luxury market space in April 2010 and acquired Bergine
to help build the business in October 2010.
In January 2011, reports surfaced that Google planned to launch a competing product, called Google Offers
, following its failure to purchase Groupon for $6 billion.
In April 2011, Facebook began testing a social-buying program. This move by Facebook was speculated to be a competitive threat to Groupon.
In October 2011, local advertising & commerce platform Adlibrium announced Adlibrium Dailies the first free daily deal service for merchants which according to estimates reaches nearly 4M consumers via email and mobile combined.
, Eric Lefkofsky
and Brad Keywell are investors in Groupon. In April 2010, Groupon raised $135 million from Digital Sky Technologies
, a Russian investment firm. On December 29, 2010, Groupon's executive board approved a change to Groupon's certificate of incorporation
that would permit the company to raise $950 million in venture capital funding, based on a valuation of $6.4 billion. On June 2, 2011, Groupon filed to go public. The IPO will be handled by Morgan Stanley, Goldman Sachs Group, and Credit Suisse Group and will trade under the ticker symbol GRPN.
From January 2010 through January 2011, Groupon’s U.S. monthly revenues grew from $11 million to $89 million.
Total 2011 U.S. revenues were an estimated $460 million. Groupon’s 2011 estimated revenues are in the $3 billion to $4 billion range.
In October 2010, Yahoo!
was rumored to have offered over $3 billion to acquire Groupon. On November 30, 2010, it was reported that Google offered $5.3 billion with a $700 million earnout to acquire Groupon and was rejected on December 3, 2010. After the rejection of the Google/Groupon buy-out, Groupon proceeded with their own initial public offering
.
advertisement
in which actor Timothy Hutton
begins by making a plea for the people of Tibet
before delivering the punch line
: "But they still whip up an amazing fish curry." Critics of the ad took to several social media
outlets to argue that Groupon was joking about the plight of Tibetans to sell their services. The following day, Groupon responded by defending their commercial and their philanthropic
stance.
The environmental organization Greenpeace
praised Groupon's Super Bowl
ads. On February 10, 2011, Groupon's founder Andrew Mason apologized and pulled the ad.
which prohibits retailers from setting expiration dates less than 5 years after a card is purchased.
's possible run for the U.S. presidency, in April 2011 Groupon said "Enough consumers have contacted us to warrant ensuring that we don't place ads on the 'Apprentice' home page in the future." The company said the action was to distance itself from "political criticism", and that "it's avoiding intentionally upsetting a segment of our customers."
, according to interpretation of IPO documentation, because it has publicly disclosed that it is losing approximately US$100 million per quarter, has a net negative balance of $230 million, and is using later investors' money to pay off earlier investors.
On August 10, 2011, Groupon updated its IPO filing, after facing scrutiny from regulators and analysts over its use of a non-standard accounting metric called Adjusted Consolidated Segment Operating Income
. Critics argued that ACSOI was used by Groupon to present a misleading metric of profitability. Groupon's original IPO filing with ACSOI accounting showed a positive operating income of $60.6 million for 2010; after replacing the ACSOI metric with standard accounting metrics, Groupon's IPO filing reported an operating loss of $420 million for 2010.
Analysts also criticized Groupon's decision to pay out over $940 million of the $1.12 billion in venture capital Groupon had raised before the IPO - over 84% of its venture capital raised - as cash payouts to its 3 founders and early backers, rather than into the money-losing company. Co-founder Eric Lefkofsky alone received over $300 million in early 2011, just weeks before the company filed its IPO paperwork. The large cash payout also made Groupon technically insolvent when it filed for its IPO.
On October 21, 2011, Groupon set terms for its IPO on NASDAQ, planning to offer 30 million shares at $16-18. The terms implied a dealsize of $510 million and a valuation of $11.2 billion. On November 4th, Groupon raised $700 million, 30 percent more than it sought, valuing them at about $12.7 billion.
The 30 million shares comprise 5% of the Company's Common Stock
As of 4th November 2011 Groupon was valued at $13 billion and the float was at 35 million shares going at $20 each whereas they were last priced at between $16 and $18.
On their opening on Nasdaq
, Groupon shares jumped more than 50 percent to a high of $29.52.However, on November 22, 2011 the stock price fell below its IPO level.
One deal a day
Deal of the day is a type of ecommerce in which a website offers a single product for sale for a period of 24 to 36 hours...
website that features discounted gift certificates usable at local or national companies. Groupon was launched in November 2008, the first market for Groupon was Chicago, followed soon thereafter by Boston
Boston
Boston is the capital of and largest city in Massachusetts, and is one of the oldest cities in the United States. The largest city in New England, Boston is regarded as the unofficial "Capital of New England" for its economic and cultural impact on the entire New England region. The city proper had...
, New York City
New York City
New York is the most populous city in the United States and the center of the New York Metropolitan Area, one of the most populous metropolitan areas in the world. New York exerts a significant impact upon global commerce, finance, media, art, fashion, research, technology, education, and...
, and Toronto
Toronto
Toronto is the provincial capital of Ontario and the largest city in Canada. It is located in Southern Ontario on the northwestern shore of Lake Ontario. A relatively modern city, Toronto's history dates back to the late-18th century, when its land was first purchased by the British monarchy from...
. , Groupon serves more than 150 markets in North America and 100 markets in Europe, Asia and South America and has amassed 35 million registered users. In October 2011, a report from Forrester Research suggested that the Groupon business model was a "disaster", and that the firm had become an example of "how fast an Internet darling can fall."
The idea for Groupon was created by now-CEO and Pittsburgh
Pittsburgh, Pennsylvania
Pittsburgh is the second-largest city in the US Commonwealth of Pennsylvania and the county seat of Allegheny County. Regionally, it anchors the largest urban area of Appalachia and the Ohio River Valley, and nationally, it is the 22nd-largest urban area in the United States...
native Andrew Mason
Andrew Mason
Andrew Mason was an English cricketer. He was a right-handed batsman and a right-arm off-break bowler who played for Herefordshire. He was born in Worcester....
. The idea subsequently gained the attention of his former employer, Eric Lefkofsky
Eric Lefkofsky
Eric Paul Lefkofsky is a U.S.-born serial entrepreneur. He is currently president of Blue Media, LLC, a Chicago-based private equity and consulting firm. In March 2011, Forbes named him one of 2011's new billionaires.-Early life:...
, who provided $1 million in "seed money" to develop the idea. In April 2010, the company was valued at $1.35 billion. According to a report conducted by Groupon's marketing association and reported in Forbes Magazine, which was reported by the Wall Street Journal, Groupon is "projecting that the company is on pace to make $1 billion in sales faster than any other business, ever".
History
Groupon grew out of the website The Point in November 2008. Its name blends from “group” and “coupon”. Groupon's first deal was a half-price offer for pizzas for the restaurant on the first floor of its building in Chicago.Groupon owns numerous international operations, all of which were originally deal-of-the-day services similar to it, but most of which were subsequently re-branded under the Groupon name after acquisition; these have included the European-based MyCityDeal
MyCityDeal
Groupon MyCityDeal is a collective buying power, deal-of-the-day website that is focused on bringing discounted price deals in the lifestyle and leisure sector to UK and European markets. Originally founded in Berlin as CityDeal in December 2009, the collective now serves Germany, France, Spain,...
(17 May 2010), the South American ClanDescuento (22 June 2010), the Singaporean Beeconomic.com, the Japanese service Qpod.jp, Russian Darberry.ru (both on 17 August 2010).
Groupon has recently bought the Indian deal-of-the-day website SoSasta.com and will be re-branding it soon as well. The Groupon acquisitions of uBuyiBuy launched services under the Groupon name in Hong Kong, Singapore, the Philippines and Taiwan. Groupon also acquired GroupsMore.com in Malaysia to expand its business there.
Prior to these acquisitions, Groupon had bought out the mobile technology company Mob.ly. The Point, Inc., the predecessor to Groupon, bought the trademark "GROUP-ONS" from its originator in February 2009 under terms which allows the originator and first registrant of the trademark to continue the use of this trademark. In June 2011, Groupon filed with the SEC to raise up to $750 million in an initial public offering.
Business model
The company offers one "Groupon" ("group+coupon") per day in each of the markets it serves. The Groupon works as an assurance contract using ThePoint's platform: if a certain number of people sign up for the offer, then the deal becomes available to all; if the predetermined minimum is not met, no one gets the deal that day. This reduces risk for retailers, who can treat the coupons as quantity discounts as well as sales promotionSales promotion
Sales promotion is one of the four aspects of promotional mix. Media and non-media marketing communication are employed for a pre-determined, limited time to increase consumer demand, stimulate market demand or improve product availability...
tools. Groupon makes money by keeping approximately half the money the customer pays for the coupon.
For example, an $80 massage could be purchased by the consumer for $40 and then Groupon and the retailer would split the $40. That is, the retailer gives a massage valued at $80 and gets approximately $20 from Groupon for it. And the consumer gets the massage, in this example, from the retailer for which they have paid $40 to Groupon. There are certain businesses to which Groupon will not offer its services, including shooting ranges, abortion clinics and strip clubs.
Unlike classified advertising
Classified advertising
Classified advertising is a form of advertising which is particularly common in newspapers, online and other periodicals which may be sold or distributed free of charge...
, the merchant does not pay any upfront cost to participate, Groupon collects personal information from willing consumers and then contacts only those consumers, primarily by daily email, who may possibly be interested in a particular product or service. Groupon breaks into new markets by identifying successful local businesses, first by sending in an advance squadron of employees to research the local market; when it finds a business with outstanding reviews, salespeople approach it and explain the model, and use social marketing sites such as Facebook
Facebook
Facebook is a social networking service and website launched in February 2004, operated and privately owned by Facebook, Inc. , Facebook has more than 800 million active users. Users must register before using the site, after which they may create a personal profile, add other users as...
to further promote the idea.
Reflecting its focus on sales promotion, Groupon employs a sizable number of creative staff who draft descriptions for the deals featured by email and on the website. Groupon's promotional text for the 'deals' has been seen as a contributing factor to the popularity of the site, featuring a distinctive mix of thorough fact-checking and witty humor.
Owing to Groupon's market being primarily composed of female customers, the deals are often focused on the health, fitness and beauty markets.
There are potential problems with the business model. For example, a successful deal could temporarily swamp a small business with too many customers, risking a possibility that customers will be unsatisfied, or that there won't be enough product to meet the demand. Gap
Gap (clothing retailer)
The Gap, Inc. is an American clothing and accessories retailer based in San Francisco, California, and founded in 1969 by Donald G. Fisher and Doris F. Fisher. The company has five primary brands: the namesake Gap banner, Banana Republic, Old Navy, Piperlime and Athleta. As of September 2008,...
, a large clothing retailer, was able to handle 445,000 coupons in a national deal (although it experienced server problems at one point), but a smaller business could become suddenly flooded with customers. One coffee shop
Coffeehouse
A coffeehouse or coffee shop is an establishment which primarily serves prepared coffee or other hot beverages. It shares some of the characteristics of a bar, and some of the characteristics of a restaurant, but it is different from a cafeteria. As the name suggests, coffeehouses focus on...
in Portland
Portland, Oregon
Portland is a city located in the Pacific Northwest, near the confluence of the Willamette and Columbia rivers in the U.S. state of Oregon. As of the 2010 Census, it had a population of 583,776, making it the 29th most populous city in the United States...
struggled with an increase in customers for three months, when it sold close to 1,000 Groupons on the one day it was offered, according to one report. In response to similar problems, Groupon officials state that 'deal' subscriptions should be capped in advance to a reasonable number.
Many businesses thought that they would attract new customers by offering a very low offer price who would later turn into full paying customer. However, many cases the Groupon deal only attracted bargain hunters who never returned to the same business as a normal customer (i.e. paying standard price for the products or services).
, it is difficult for local merchants to get Groupon interested in agreeing to a particular deal. According to the Wall Street Journal, seven of every eight possible deals suggested by merchants were dismissed by Groupon.
The site has recently launched a mobile application available on Wap, Android, Blackberry, iPhone and Windows Phone 7. It allows users to buy deals on their phones and retrieve them using the screen as a coupon.
In February 2011, Groupon Russia announced it would join the Russian Company Mail.ru
Mail.ru
Mail.ru is the largest free e-mail service of the Runet. The business was originally owned by Port.ru, a company founded in 1998 by Eugene Goland, Michael Zaitsev and Alexey Krivenkov as spin-off from DataArt. It received an initial investment of USD 1 million from the well-known investor James...
in order to start offering deals on its social network Odnoklassniki. This way, users would be able to buy and share deals from Groupon on their profiles.
Geographic markets
Groupon serves 500 markets and 44 countries, the many major geographic markets internationally include cites in the United StatesUnited States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, Canada
Canada
Canada is a North American country consisting of ten provinces and three territories. Located in the northern part of the continent, it extends from the Atlantic Ocean in the east to the Pacific Ocean in the west, and northward into the Arctic Ocean...
, Taiwan
Taiwan
Taiwan , also known, especially in the past, as Formosa , is the largest island of the same-named island group of East Asia in the western Pacific Ocean and located off the southeastern coast of mainland China. The island forms over 99% of the current territory of the Republic of China following...
, Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
, Germany
Germany
Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...
, Greece
Greece
Greece , officially the Hellenic Republic , and historically Hellas or the Republic of Greece in English, is a country in southeastern Europe....
, Finland
Finland
Finland , officially the Republic of Finland, is a Nordic country situated in the Fennoscandian region of Northern Europe. It is bordered by Sweden in the west, Norway in the north and Russia in the east, while Estonia lies to its south across the Gulf of Finland.Around 5.4 million people reside...
, France
France
The French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
, the Netherlands
Netherlands
The Netherlands is a constituent country of the Kingdom of the Netherlands, located mainly in North-West Europe and with several islands in the Caribbean. Mainland Netherlands borders the North Sea to the north and west, Belgium to the south, and Germany to the east, and shares maritime borders...
, Belgium
Belgium
Belgium , officially the Kingdom of Belgium, is a federal state in Western Europe. It is a founding member of the European Union and hosts the EU's headquarters, and those of several other major international organisations such as NATO.Belgium is also a member of, or affiliated to, many...
, the United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
, Ireland
Ireland
Ireland is an island to the northwest of continental Europe. It is the third-largest island in Europe and the twentieth-largest island on Earth...
, Israel
Israel
The State of Israel is a parliamentary republic located in the Middle East, along the eastern shore of the Mediterranean Sea...
, Italy
Italy
Italy , officially the Italian Republic languages]] under the European Charter for Regional or Minority Languages. In each of these, Italy's official name is as follows:;;;;;;;;), is a unitary parliamentary republic in South-Central Europe. To the north it borders France, Switzerland, Austria and...
, Poland
Poland
Poland , officially the Republic of Poland , is a country in Central Europe bordered by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian exclave, to the north...
, Portugal
Portugal
Portugal , officially the Portuguese Republic is a country situated in southwestern Europe on the Iberian Peninsula. Portugal is the westernmost country of Europe, and is bordered by the Atlantic Ocean to the West and South and by Spain to the North and East. The Atlantic archipelagos of the...
, Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
, Puerto Rico
Puerto Rico
Puerto Rico , officially the Commonwealth of Puerto Rico , is an unincorporated territory of the United States, located in the northeastern Caribbean, east of the Dominican Republic and west of both the United States Virgin Islands and the British Virgin Islands.Puerto Rico comprises an...
, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
, Turkey
Turkey
Turkey , known officially as the Republic of Turkey , is a Eurasian country located in Western Asia and in East Thrace in Southeastern Europe...
, Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
, Peru
Peru
Peru , officially the Republic of Peru , is a country in western South America. It is bordered on the north by Ecuador and Colombia, on the east by Brazil, on the southeast by Bolivia, on the south by Chile, and on the west by the Pacific Ocean....
, Chile
Chile
Chile ,officially the Republic of Chile , is a country in South America occupying a long, narrow coastal strip between the Andes mountains to the east and the Pacific Ocean to the west. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage in the far...
, Colombia
Colombia
Colombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
, South Korea
South Korea
The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...
, Sweden
Sweden
Sweden , officially the Kingdom of Sweden , is a Nordic country on the Scandinavian Peninsula in Northern Europe. Sweden borders with Norway and Finland and is connected to Denmark by a bridge-tunnel across the Öresund....
, Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
, the United Arab Emirates
United Arab Emirates
The United Arab Emirates, abbreviated as the UAE, or shortened to "the Emirates", is a state situated in the southeast of the Arabian Peninsula in Western Asia on the Persian Gulf, bordering Oman, and Saudi Arabia, and sharing sea borders with Iraq, Kuwait, Bahrain, Qatar, and Iran.The UAE is a...
, Norway
Norway
Norway , officially the Kingdom of Norway, is a Nordic unitary constitutional monarchy whose territory comprises the western portion of the Scandinavian Peninsula, Jan Mayen, and the Arctic archipelago of Svalbard and Bouvet Island. Norway has a total area of and a population of about 4.9 million...
, Romania
Romania
Romania is a country located at the crossroads of Central and Southeastern Europe, on the Lower Danube, within and outside the Carpathian arch, bordering on the Black Sea...
, Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
, Malaysia, Hong Kong
Hong Kong
Hong Kong is one of two Special Administrative Regions of the People's Republic of China , the other being Macau. A city-state situated on China's south coast and enclosed by the Pearl River Delta and South China Sea, it is renowned for its expansive skyline and deep natural harbour...
, Mainland China
Mainland China
Mainland China, the Chinese mainland or simply the mainland, is a geopolitical term that refers to the area under the jurisdiction of the People's Republic of China . According to the Taipei-based Mainland Affairs Council, the term excludes the PRC Special Administrative Regions of Hong Kong and...
, Russia
Russia
Russia or , officially known as both Russia and the Russian Federation , is a country in northern Eurasia. It is a federal semi-presidential republic, comprising 83 federal subjects...
and South Africa
South Africa
The Republic of South Africa is a country in southern Africa. Located at the southern tip of Africa, it is divided into nine provinces, with of coastline on the Atlantic and Indian oceans...
.
In Australia, development of Groupon has been slow owing to legal disputes between Groupon and an Australian company, Scoopon. Groupon now operates in Australia as "Stardeals" while the legal problems are worked out.
On February 19, 2011 The Wall Street Journal
The Wall Street Journal
The Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
reported that Groupon was preparing to launch in China
People's Republic of China
China , officially the People's Republic of China , is the most populous country in the world, with over 1.3 billion citizens. Located in East Asia, the country covers approximately 9.6 million square kilometres...
.
Groupon is also expanding into the MENA region with its launch of Groupon UAE on June 16, 2011.
Groupon New Zealand launched on 10 May 2011 in conjunction with local Facebook tourism hub Gotta Love NZ. The New Zealand market is already crowded with over 50 deal sites active.
Competitors
Worldwide, there are over 500 similar sites including over 100 in US. However, by December 2010, only one competitor, named LivingSocialLivingSocial
-Business model:LivingSocial offers a new deal each day to its members who subscribe via email. Once a deal has been purchased, members are e-mailed their redemption vouchers the following business day, around 5 a.m. local time...
, has been described as a serious competitor; according to one estimate, it received an investment from Amazon
Amazon.com
Amazon.com, Inc. is a multinational electronic commerce company headquartered in Seattle, Washington, United States. It is the world's largest online retailer. Amazon has separate websites for the following countries: United States, Canada, United Kingdom, Germany, France, Italy, Spain, Japan, and...
of $175 million. Other notable firms operating in the market include BuyWithMe
BuyWithMe
BuyWithMe is a group buying website allowing consumers to leverage group buying power to get discounts with local merchants. The company is headquartered in New York City. Funding was obtained via a group of angel investors. BuyWithMe's first market was Boston, where restaurants including UFood...
, Plum district
Plum district
Plum District is a group buying website that focuses on mothers and their buying power. The company is headquartered in San Francisco and offers deals in North America as a 'Everywhere Deal' and in local markets including San Francisco, New York, Chicago, Los Angeles, and Seattle.In March 2011, the...
, Jasmere.com
Jasmere.com
Jasmere.com is a deal-of-the-day website with a format similar to Groupon.com.Jasmere sells merchandise from upscale though lesser-known vendors. It offers discounts of 50-70% off the regular retail prices...
, and Saveology
Saveology
Saveology Daily Deals is a deal-of-the-day website based in Ft. Lauderdale, Florida that features discounts, coupons, gift certificates, and gift cards that subscribed members can use at local and national companies...
. Gilt Groupe
Gilt Groupe
Gilt Groupe is a shopping website based in the United states, offering its members merchandise, clothing, home decor, delicatessen food, travel and activities. Gilt Groupe was founded in 2007 and has 3.5 million members...
launched Gilt City, a Groupon competitor, in the luxury market space in April 2010 and acquired Bergine
Bergine
Bergine launched in March 2010 as the first luxury deal-of-the-day site in the United States. Co-founded by husband/wife team Ian Picache and Patricia Calfee, Bergine provided daily "flash-sale" offers to restaurants, spas and boutiques at up to 70% off retail prices...
to help build the business in October 2010.
In January 2011, reports surfaced that Google planned to launch a competing product, called Google Offers
Google Offers
Google Offers is a deal-of-the-day website that will be localized to major geographic markets in the United States and abroad. Google confirmed the website in January 2011, after an attempted buyout by Google of established competitor Groupon for a reported sum of US$ 6 billion was turned down...
, following its failure to purchase Groupon for $6 billion.
In April 2011, Facebook began testing a social-buying program. This move by Facebook was speculated to be a competitive threat to Groupon.
In October 2011, local advertising & commerce platform Adlibrium announced Adlibrium Dailies the first free daily deal service for merchants which according to estimates reaches nearly 4M consumers via email and mobile combined.
Financials
New Enterprise AssociatesNew Enterprise Associates
New Enterprise Associates is a global investment firm focused on venture capital and growth equity investments. With approximately $11 billion in committed capital, NEA is among the largest venture firms. The firm invests in three broad industry sectors: information technology, healthcare, and...
, Eric Lefkofsky
Eric Lefkofsky
Eric Paul Lefkofsky is a U.S.-born serial entrepreneur. He is currently president of Blue Media, LLC, a Chicago-based private equity and consulting firm. In March 2011, Forbes named him one of 2011's new billionaires.-Early life:...
and Brad Keywell are investors in Groupon. In April 2010, Groupon raised $135 million from Digital Sky Technologies
Digital Sky Technologies
Digital Sky Technologies or Mail.Ru Group is an international investment firm focused solely on the Internet sector. The firm was founded by Yuri Milner and emerged out of Mail.ru Group...
, a Russian investment firm. On December 29, 2010, Groupon's executive board approved a change to Groupon's certificate of incorporation
Certificate of incorporation
A certificate of incorporation is a legal document relating to the formation of a company or corporation. It is a license to form a corporation issued by state government. Its precise meaning depends upon the legal system in which it is used, but the two primary meanings are:* In the U.S.A...
that would permit the company to raise $950 million in venture capital funding, based on a valuation of $6.4 billion. On June 2, 2011, Groupon filed to go public. The IPO will be handled by Morgan Stanley, Goldman Sachs Group, and Credit Suisse Group and will trade under the ticker symbol GRPN.
From January 2010 through January 2011, Groupon’s U.S. monthly revenues grew from $11 million to $89 million.
Total 2011 U.S. revenues were an estimated $460 million. Groupon’s 2011 estimated revenues are in the $3 billion to $4 billion range.
In October 2010, Yahoo!
Yahoo!
Yahoo! Inc. is an American multinational internet corporation headquartered in Sunnyvale, California, United States. The company is perhaps best known for its web portal, search engine , Yahoo! Directory, Yahoo! Mail, Yahoo! News, Yahoo! Groups, Yahoo! Answers, advertising, online mapping ,...
was rumored to have offered over $3 billion to acquire Groupon. On November 30, 2010, it was reported that Google offered $5.3 billion with a $700 million earnout to acquire Groupon and was rejected on December 3, 2010. After the rejection of the Google/Groupon buy-out, Groupon proceeded with their own initial public offering
Initial public offering
An initial public offering or stock market launch, is the first sale of stock by a private company to the public. It can be used by either small or large companies to raise expansion capital and become publicly traded enterprises...
.
Groupon Now application
Groupon has developed an application aimed at smartphone and tablet users application consisting of the two buttons: "I'm Hungry" and "I'm Bored” which locates the closest and best deals for food or entertainment, respectively, through tracking an individual via GPS.Super Bowl commercial
Groupon aired a controversial Super Bowl XLVSuper Bowl XLV
Super Bowl XLV was an American football game between the American Football Conference champion Pittsburgh Steelers and the National Football Conference champion Green Bay Packers to decide the National Football League champion for the 2010 season. The game was held at Cowboys Stadium in...
advertisement
Television advertisement
A television advertisement or television commercial, often just commercial, advert, ad, or ad-film – is a span of television programming produced and paid for by an organization that conveys a message, typically one intended to market a product...
in which actor Timothy Hutton
Timothy Hutton
Timothy Tarquin Hutton is an American actor. He is the youngest actor to win the Academy Award for Best Supporting Actor, which he won at the age of 20 for his performance as Conrad Jarrett in Ordinary People . He currently stars as Nathan "Nate" Ford on the TNT series Leverage.-Early life:Timothy...
begins by making a plea for the people of Tibet
Tibet
Tibet is a plateau region in Asia, north-east of the Himalayas. It is the traditional homeland of the Tibetan people as well as some other ethnic groups such as Monpas, Qiang, and Lhobas, and is now also inhabited by considerable numbers of Han and Hui people...
before delivering the punch line
Punch line
A punch line is the final part of a joke, comedy sketch, or profound statement, usually the word, sentence or exchange of sentences which is intended to be funny or to provoke laughter or thought from listeners...
: "But they still whip up an amazing fish curry." Critics of the ad took to several social media
Social media
The term Social Media refers to the use of web-based and mobile technologies to turn communication into an interactive dialogue. Andreas Kaplan and Michael Haenlein define social media as "a group of Internet-based applications that build on the ideological and technological foundations of Web 2.0,...
outlets to argue that Groupon was joking about the plight of Tibetans to sell their services. The following day, Groupon responded by defending their commercial and their philanthropic
Philanthropy
Philanthropy etymologically means "the love of humanity"—love in the sense of caring for, nourishing, developing, or enhancing; humanity in the sense of "what it is to be human," or "human potential." In modern practical terms, it is "private initiatives for public good, focusing on quality of...
stance.
The environmental organization Greenpeace
Greenpeace
Greenpeace is a non-governmental environmental organization with offices in over forty countries and with an international coordinating body in Amsterdam, The Netherlands...
praised Groupon's Super Bowl
Super Bowl
The Super Bowl is the championship game of the National Football League , the highest level of professional American football in the United States, culminating a season that begins in the late summer of the previous calendar year. The Super Bowl uses Roman numerals to identify each game, rather...
ads. On February 10, 2011, Groupon's founder Andrew Mason apologized and pulled the ad.
Violation of Gift Certificate Expiration Laws
In March 2011, Eli R. Johnson filed a lawsuit in federal court against Groupon, based on a claim that the company issues "gift certificates" that are not allowed under the Credit Card Accountability Responsibility and Disclosure ActCredit CARD Act of 2009
The Credit Card Accountability Responsibility and Disclosure Act of 2009 or Credit CARD Act of 2009 is a federal statute passed by the United States Congress and signed by President Barack Obama on May 22, 2009...
which prohibits retailers from setting expiration dates less than 5 years after a card is purchased.
Donald Trump
Responding to concerns about Donald TrumpDonald Trump
Donald John Trump, Sr. is an American business magnate, television personality and author. He is the chairman and president of The Trump Organization and the founder of Trump Entertainment Resorts. Trump's extravagant lifestyle, outspoken manner and role on the NBC reality show The Apprentice have...
's possible run for the U.S. presidency, in April 2011 Groupon said "Enough consumers have contacted us to warrant ensuring that we don't place ads on the 'Apprentice' home page in the future." The company said the action was to distance itself from "political criticism", and that "it's avoiding intentionally upsetting a segment of our customers."
IPO
Some analysts claim that Groupon operates "like" a Ponzi schemePonzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation...
, according to interpretation of IPO documentation, because it has publicly disclosed that it is losing approximately US$100 million per quarter, has a net negative balance of $230 million, and is using later investors' money to pay off earlier investors.
On August 10, 2011, Groupon updated its IPO filing, after facing scrutiny from regulators and analysts over its use of a non-standard accounting metric called Adjusted Consolidated Segment Operating Income
ACSOI
ACSOI is a controversial non-GAAP accounting metric.The metric amortizes marketing and acquisition costs over several accounting periods. The "Adjusted" part of the metric increases a company's reported net income in the most recent accounting period...
. Critics argued that ACSOI was used by Groupon to present a misleading metric of profitability. Groupon's original IPO filing with ACSOI accounting showed a positive operating income of $60.6 million for 2010; after replacing the ACSOI metric with standard accounting metrics, Groupon's IPO filing reported an operating loss of $420 million for 2010.
Analysts also criticized Groupon's decision to pay out over $940 million of the $1.12 billion in venture capital Groupon had raised before the IPO - over 84% of its venture capital raised - as cash payouts to its 3 founders and early backers, rather than into the money-losing company. Co-founder Eric Lefkofsky alone received over $300 million in early 2011, just weeks before the company filed its IPO paperwork. The large cash payout also made Groupon technically insolvent when it filed for its IPO.
On October 21, 2011, Groupon set terms for its IPO on NASDAQ, planning to offer 30 million shares at $16-18. The terms implied a dealsize of $510 million and a valuation of $11.2 billion. On November 4th, Groupon raised $700 million, 30 percent more than it sought, valuing them at about $12.7 billion.
The 30 million shares comprise 5% of the Company's Common Stock
As of 4th November 2011 Groupon was valued at $13 billion and the float was at 35 million shares going at $20 each whereas they were last priced at between $16 and $18.
On their opening on Nasdaq
NASDAQ
The NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
, Groupon shares jumped more than 50 percent to a high of $29.52.However, on November 22, 2011 the stock price fell below its IPO level.