>Bye-Bye Groupon- You were fun while you lasted!

>Groupon was fun while it lasted.  The Daily Deal market is now saturated and Groupon’s 15 minutes of fame are finished.  To emphasize, open another internet browser and Google “daily deals.”  What returns is a swarm of Coupon Sites and Daily Deal advertisements.

Now, I’d be lying if I told you I wasn’t disappointed.  Groupon was something of a social status for me.  Our neighbors bought Groupon deals, our friends, even my wife and I would buy 3 or so deals a month.  I would share deals with friends, have date nights with couples, even have a reason to call my mother and not talk about the same thing 6 different times.   

Before I digress into the saturated deal market, let me tell you about Groupon.  They were founded in 2007 under the website called “The Point.”  The Point grew into what we now know as Groupon.  Today Groupon serves 500 markets, 44 countries, employs over 2000 people, and is headquartered in downtown Chicago.  To date, over 43.5 million “Groupons” have been bought, and over $1.8B in consumer spend has been saved.   Groupon’s market-share is still the strongest with over 70 million subscribers.   And in 2010, Groupon retired a whopping $760M in annual revenue.  Pretty impressive numbers, huh?  Groupon monetizes by taking a cut of the deal sold, normally 50%.  For example if a deal is sold for $50, Groupon would own $25. 

For a short time, Groupon owned its market.  Now, every other would-be entrepreneur has some different spin to the daily deal market and promotes their own version of Groupon.  We’ve all heard of Living Social, Yelp, and OpenTable.   But now Facebook is entering the market.  FACEBOOK- the kingpin of everything is entering the deal market.  AT&T just announced its own deal site, as well as TravelZoo, Yahoo and Microsoft.  New York Times is right around the corner.

As if that isn’t enough, there are even deal-sights for different interests and cultures.  Jewish?  You’ve got jewpon.com.  African American?  You’ve got Black Biz Hookup.  Gay?  You’ve got DailyPride.com.  Even pet deals and local deals are becoming popular.  And on top of all, there is YipIt.  YipIt is an aggregation site for daily deals.  Think of Yipit of the “Priceline or Orbitz” of Daily Deals.  (Another note on Yipit.  Recently they raised $175M in venture funding.  Groupon and other sites, give YipIt a 2% kick-back on sales)
Let me leave you with one final point to ponder.  Is Groupon really worth $15-25B?  That’s B as in Billion.  Goldman Sachs and Morgan Stanley seem to think so, as they most likely would handle the Initial Public Offer.  The Investment Banks don’t mind the inflated valuation because they’ll reap a larger fee.  But come on, $15-25 Billion?  I’m nervous that we’re on the cusp of another over-priced tech bubble.  Folks- the dot-com crash of 99 wasn’t that long ago.  The old adage is History repeats itself.  Let’s just hope we’re smarter than we were 11 years ago.

Hopefully, I’ll read this post a year from now and Groupon will have overcome these competitors.  Groupon if you’re reading, my humble advice is innovate, innovate, innovate.  But if you dont, then I guess my title was appropriate.  Bye-bye Groupon, you were fun while you lasted.


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