IS231 E-Commerce – Week #2 Assignment

Grantham University

4/21/20

Business Models

Groupon Business Model

The e-commerce company of my choice is Groupon. Groupon is a marketing service that offers

daily discount coupons. Groupon is the fastest growing company in the daily deal social e-

commerce arena (Hughes, S., & Breytenbach, C. (2013). Groupons Growth and Globalization

Strategy). For businesses like, restaurants, stores, and events. Typically, Groupon deals are

offered for up to 24 hours, bringing a sense of urgency for clients to flock to those business to

grab the deals. The coupon will then become available once a pre-determined number of clients

commit to purchasing the product or service.

Groupon`s value proposition is to offer low prices with convenience and accessibility. Initially

the value proposition was to help businesses introduce people to their business. Therefore,

generating new customers for many businesses. For example, I have looked on Groupon before

to see if there was a discount for any local restaurants and in fact they did and it saved me about

$30. Another example to look at is, let’s say a horseback riding place normally charges $100 for

a private horseback riding lesson. At 50% off your normal rate, you’d be offering your lessons

for $50 each to Groupon buyers making a lot of flow in customers. Or if a business is offering

guitar lessons, instead of offering a coupon for half off one lesson, they can offer half off a

package of two lessons. Most certainly catching the interests of new customers.

There is no upfront cost for a business if it wants to list a deal on Groupon. Although, since

Groupon offers amazing Groupon discounts and coupons, they of course take a cut of the profits.

Normally around 50% depending on the vendor ((n.d.). Retrieved from

https://www.thebalancesmb.com/how-using-groupon-can-hurt-your-business-3867065) This is

only fair seeing as how Groupon is serving advertisement, generating sales, and guaranteeing

minimum revenue. For business to maintain the flow of new customers by using Groupon`s

discount coupon they can limit one person visits, limit number of coupons available, have a
registration/ reservation required, have new customers only, or promotional values that expire

within 120 days after purchase.

Some main competitors would be Amazon, Walmart, and RetailMeNot. Amazon being their top

competitor with a market cap closing in the trillion dollars. Groupon’s global revenue was $2.6

billion in 2018. A big advantage Groupon has over its competitors is that it is the biggest

organization in the day by day bargains advertise with 400,000 + dynamic arrangements

internationally. In addition to being a developing marketplace Groupon also now has online

booking or store pickup. As well as offering different deals each day for a local good, service or

event in a city where it operates. Discounts range from 50 percent to 90 percent off. Which is a

very big advantage Groupon has over competitors.

In a nutshell Groupon is a solid advertising platform, has a good reputation among consumers,

and is easy for business owners to start using. Being a powerful and effective way to generate

new leads for new businesses. Actually, findings revealed 66 percent of the merchants said the

Groupon promotions were profitable. In my opinion, Groupon is a great marketplace for anyone

starting or that has a business.

 Reference

Hughes, S., & Breytenbach, C. (2013). Groupons Growth And Globalization Strategy: Structural

And Technological Implications Of International Markets. International Business &

Economics Research Journal (IBER), 12(12), 1589-1604.

https://doi.org/10.19030/iber.v12i12.8252

(n.d.). Retrieved from https://www.thebalancesmb.com/how-using-groupon-can-hurt-your-

business-3867065