Another successful Internet Giant...Groupon

           The past few years have been known to be the age of technology. This time period has caused for the vast boom of the online market. Companies such as Google, Facebook, Amazon and Yahoo have been known to monopolize the online market in their various fields. Each day, a new Internet company is established, but competing with various giants such as Google and Facebook is a difficult one and in turn limits the success of the ne companies.
          One of the latest online success is Groupon, a deal of the day website known to be the best coupon site on the web. The company works by featuring an unbeatable deal on the best stuff to do, see, eat, and buy in your city every day. The website created by CEO Andrew Mason in April,2008 and is now operating in more than 150 markets around the world. The name of the company refers to the business model: The company offers one “Groupon” per day in each of the markets it serves. If a certain number of people sign up for the offer, the deal becomes available to all. If the predetermined minimum isn’t met, no one gets the deal that day.

           I believe this approach serves two beneficial purposes to all parties, the retailers, the consumers and Groupon: First, it provides some risk mitigation for the retailer, who can treat the coupon as quantity discounts and sales-promotion efforts. This helps bring about new customers of various outlets as well as helps keep existing customers by bringing in traffic and sales and discounting, especially in this economy. Second, it helps spread the word through social groups, as people who want the deal tell their friends about it to increase the chances of reaching the tipping point. Groupon does this by sending emails to their members and encouraging them to spread the words to friends and relatives in order to meet the quota so the coupon discount can be fulfilled.
            Although Groupon is know to have many competitors in their supposed narrow field. The company has been able to be a giant in this segment as it is believed to have a comparative advantage in its high discounts as well as its mode of marketing. Due to this immediate success after just two years, Google offered to buy the company for 5.3 billion dollars. Unlike most small businesses, Groupon refused this sell as they see the same potential in their future that Google also perceived.
Overall, the success of instant success of Groupon has been quite astonishing. The company was founded in 2008, an age where the world economy was at one of the worst depressions since that of the 1930’s. At this time, consumers reduced their purchasing power but at the same time all sources of discounts seemed very attractive. This is believed to have lead to the high rise of what my friend calls “her shopping delight” Groupon.

So was the financial crisis of 2008 the cause of the rise of Groupon??

Resources:
http://www.squidoo.com/groupon-review
http://www.crunchbase.com/company/groupon
http://www.marketwatch.com/story/groupon-reportedly-spurns-google-merger-2010-12-04