Group Coupons: Worth the Hype?

Prior to this blog, I was only vaguely familiar with the concept of “Groupon” and similar “Daily Deal” online coupon websites.   I know a few people who try to use them whenever possible, and obviously the overall concept of coupon booklets or services is a familiar one to me.  However, I didn’t really understand the full reach of Groupon and related websites until researching it a little for this topic.  After reading the topic at Professor Miyazaki’s blog, my thought was “is this really an investment worth pursuing so hard by Google, and what could be the future of this idea as a business or marketing plan?”

 As Kara Swisher to alluded to in her article, “Google Turns Its Local Eyes to Groupon- But Who Else Could Enter Bidding?” Google going after Groupon could be a similar move, both financially and in terms of controlling market share, as their purchase of YouTube in 2006.  If Groupon was going to establish itself as a similarly dominant internet force as YouTube, that would make sense.  But the question is, does Groupon really have that kind of potential?

                According to an article by Sarah Lacy (“Why Groupon Needs a Backlash”), the company has some serious obstacles it could be facing in the near future that will determine its lasting effect on e-commerce.  One of the biggest ones is its extremely rapid global expansion, and the care (or possibly lack of) Groupon is putting in to make sure that it is done correctly.  Last June, ClubeUrbano, the Brazilian Groupon site, was exposed as having vast amounts of fake promotions and even fake companies on its website.  Also in Chile, ClanDescuesto, the Groupon site there, was found to be aggressively spamming people online in order to attract business.  Obviously, these are not ideal ways to start reaching out to potential consumers and establishing a future base of website users.  Also, Groupon already faces issues with multiple similar websites that are splintering its market share in different markets, as well as the possible problem of small businesses not continuing to use Groupon as their initial Groupon consumers only come on the promise of a great discount, and not necessarily because they want to be loyal, returning costumers.

                In theory, Groupon definitely appears to be a really good idea.  It combines bringing people together in their social networks (both online and off) with great deals at different local venues and companies.  But before Groupon continues to expand their reach, and Google ups their offer to bring them into their corporate network, Groupon should possibly look at cleaning up their overall model and making sure they have everything in proper order.