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Strategies & Market Trends : Gorilla and King Portfolio candidates - Moderated
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From: kumar11/4/2011 3:34:12 PM
1 Recommendation  Read Replies (1) of 2955
 
Groupon : Dot Com v2 (I got burnt in v1) :

news.yahoo.com

"The animal spirits have welcomed Groupon to the public markets, with a successful initial public offering that values the company at a hefty $16 billion or so. That's a much frothier start than other recent IPOs such as LinkedIn or Pandora......."

"....Low barriers to entry. Groupon's success has spawned many other deal sites, such as Living Social, LevelUp, Mogl, and hundreds of smaller outfits. By one estimate, in fact, more than 500 daily-deal sites have sprung up over the last couple of years, some of them already out of business. Groupon is the biggest so far, and it has first-mover advantage. The question is whether that will count for much in the longer term....."

"...The "decay function." Blogger James Kwak argues that Groupon's existing customer base--which the company touts as one of its most valuable assets--could end up being worth far less than the company claims. By analyzing Groupon's own data, Kwak estimates that customers who have purchased a coupon in the past and are already in the fold may end up spending less money on Groupon in the future, as they try out competing deals or simply lose interest. This "decay function" might level off at a point that allows Groupon to remain profitable. But it could also keep falling, which would force Groupon to spend a lot more on marketing to continually bring in new customers. That would be a costly and perhaps devastating blow to Groupon's business model, which relies on existing customers to keep spending......"

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