Groupon is a platform that offers deals and coupons for local and national venues. Groupon (a mix of “Group” and “Coupon”) was launched in 2008 and now serves hundreds of markets around the world. By mid-2012, the company had sold more than 170 million deals, gained more than 33 million active customers, and been used by 250,000 merchants in 48 countries.Groupon aims ”To become the operating system for local commerce.”
Groupon charges businesses a marketing fee for advertising and promoting their offers. In most cases, the fee is a percentage of the revenue generated by the custom campaign.
Using Groupon is a great way to reach new customers. Posting a coupon on Groupon gives businesses access to an audience of 39.5 million customers who are relatively likely to share information with friends online. Groupon also offers a lot of customizable marketing options that can help get very good results for targeted groups. Groupon has mobile applications and geo-coding features that are excellent tools for reaching customers when they are near your venue in a Web 3.0 environment.
The biggest disadvantages of Groupon are associated with the pricing model. Since Groupon charges a percentage of the revenue made from a campaign, businesses are at a disadvantage because they are losing more money on top of the cost of the discount. To illustrate, a 50% off coupon on Groupon represents a 75% loss of revenue for the vendor when you include the price of using Groupon. The pricing model also means that a vendor’s competitors can run the same special using a different coupon method and would make more money overall than the person on Groupon, even if the Groupon user had more people take advantage of the special.