Etude de cas Groupon

Groupon | Collective Buying
& Social Marketing

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content
I.
Groupon Profile
• Background

• Business Model and Operation

• Additional Marketing Methods
Tuán Gòu 团购
• API
Collective buying
II. Study the business model of
Store mobbing
Collective Buying
• A Six Forces Analysis

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GROUPON
COMPANY PROFILE

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Company Profile：
• Established：10/08
• Industry：Advertising and Marketing
• Employees：225 （from LinkedIn）
• Operation：
– Subscribers 4,400,000+
– Total Groupons bought 4,600,000+
• Media exposure：
• Funding：
Total $173M
Angel, 1/07 Eric Lefkofsky Brad Keywell
$1M
Series A, 1/08 New Enterprise Associates
$6.8M
Series B, 12/09 Accel Partners New Enterprise Associates
$30M
Series C, 4/10 Digital Sky Technologies Battery Ventures Accel
$135M
Partners New Enterprise Associates

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Business and Operation

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Business Model：a form of Re-intermediation
① looking for good deals,
③ gain stable sales,
find/ share shopping experience
increase awareness
Consumers
suppliers/ retailers
② Sel groupons,
charge commission
• Groupon negotiate with suppliers/ retailers to offer deals；
• Groupon promote deals and gather customers via its marketing channels；
• Groupon sel s coupons to customers and charge commission from suppliers.

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A brief review
Features：
• Consumer pays before purchasing: ensure the deals get
done；accelerate the cash flow
• Large discount for collective buying in limited time and
items：create a phenomenon of Bargaining& Panic
Buying，encourage customer wowing the deals by word
of mouth (via Social Web)；
• One deal per day, consumer don’t need to make the
choose；
• Achieve a Three-Win

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Product line（from official web site）
~ Consumer Packaged Goods ~ Electronics
~ Accessories
~ Entertainment
~ Automotive
~ Fashion
~ Beauty
~ Health & Pharmaceutical
~ Beer, Wine, and Spirits
~ Financial
~ Diet and Fitness
~ Travel
The place of AD banner

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Current sales：an analysis of 108 featured deals
Sold Items
Bought
Groupons sold cost
Categories
Count
%
Mean
Minimum Maximum
Mean
Minimum Maximum
Restaurant & Cafe
39
36%
3609
1995
7207
16
4
35
Food
14
13%
4091
2078
9746
9
3
20
Salon , Makeup & SPA
13
12%
3350
2028
4724
44
22
99
Ticket
12
11%
3669
1962
14670
10
4
25
Fitness
8
7%
2982
2050
3995
36
5
55
Tour
7
6%
6686
2487
19872
18
10
30
Grocery
6
6%
5114
2679
9995
17
15
20
Lesson
5
5%
2409
1998
2600
34
20
69
Membership
3
3%
3814
2355
4913
37
30
40
Car Wash
1
1%
2358
2358
2358
5
5
5
Total
108
100%
average sales=
3822
average cost=
21.76
Value
Discount
Mean
Minimum Maximum
Mean
Minimum Maximum
33
10
75
53%
47%
60%
21
8
40
54%
50%
67%
220
45
805
61%
50%
88%
21
8
50
50%
45%
53%
136
15
480
62%
50%
95%
40
20
80
52%
42%
63%
37
30
40
55%
50%
63%
135
40
290
66%
50%
91%
93
75
110
61%
58%
64%
12
12
12
58%
58%
58%
average value= 67.84
average discount= 56%
•
Main deals are services, such as restaurant & café, hair salon/ SPA, training.
•
Unit prices are low averaged $68，Groupon cost $22；discounts are high
averaged 56%
•
Need no logistic distribution center

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Business Model
One deal per
day
High discount
Time limit
Buyers must
exceed the floor
level to get the
deal open

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Business Model
Encourage virus-
spreading via social
application
Facebook | Twitter
Additional deals

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A virus marketing– Leverage the influence with the
social applications
•
Integrated with Facebook Connect; no bother to register
•
Location-based operation, every city has an independent twitter/ face
book account, which is aimed to talk and communicate with
customers
•
A $10 bonus for friend recommendation
•
Email subscription/ share of deals
•
RSS subscription of deals
•
API, open the deals information

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Leverage the influence with the social applications
• A two-degree networking relationship analysis of 100
randomly-chosen Twitter followers of Groupon L.A
– 100 users generated 4000+relationship（including Follow、Mention &
Reply）
• Feature：
– Leverage the marketing info/ influence
– Do not to CONTORL but to INFLUENCE

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Additional marketing methods
• Company blog，to talk with customer
/ suppliers
• Live Off/ Groupon Says，make the
topics and earn eyebal s, encourage
wowing
• Make the service personal, let
customer know the people behind the
screen to increase the trust and
intimacy（decrease the emotional
distance & barrier）

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Business Suggestion: let customer vote from whom
want buy

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Launch a rewards program
• The currency, G’s, are awarded for viewing deals and buying deals.
And if you buy a deal early (a minimum number of buyers have to
go for a deal or else no one gets it), you get even more G’s.

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Why Social Marketing?
Those behaviors
Key conversion
happening on
point
Social web
The main focus of
traditional marketing
The differences of traditional/ social marketing：
• Traditional：focus on customer awareness, educating customer（product
function, feature or brand image etc）
• Social：focus on equal, transparent communication，let customer know
the benefit of buying a specific product to make a smart purchase

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Groupon recruitment
• Expand its business development team in US market；
• Web/ Internet product development, User experience

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Operation Area
 Cover 60+ cities in US
 Subscribers 4,500,000+
 Sales：
 Groupon sold 4,500,000+

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Web Traffic：Unique Visitors (compared with Newgg.com)
Data source：

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Demographics of web visitors
Data source：

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API

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Open its deals（not function as a platform instead）
http://www.groupon.com/pages/api
API case – Android APP
Widget
Groupon makes its deals as a news media

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Future Operation & Direction

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Luxury product aimed at high-class consumers
Put strict requirement for membership
• The tax-income document needed

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M&A: Mob.ly
• Going mobile!!!
• Mob.ly is a mobile application
service The company, which
works with clients to create
mobile applications from top
to bottom (from conception to
design and testing), has built
apps for clients like Comedy
Central, NBC, Digg and Yahoo!
• Mob.ly is led by former Yahoo!
Senior Director of Product
Management Mihir Shah and
Yishai Lerner, former Director
of Engineering at Carrier IQ.

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A Review
• Simple and clean profit model
• Simple and satisfying shopping experience

• Lower entry barrier
• Not too many products
• Consumers don’t have many options
• Issues of after-sales and warranty

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AN ANALYSIS OF
COLLECTIVE-BUYING MODEL

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A Five-force industry analysis
The sixth force：manipulating the development and open of
social web, leveraging the marketing efforts
For New Entrants：
• pioneer advantage （Brand
awareness/scale economics）
For Supplier：
• Funding advantage
• Large customer base, ability
• Business developing ability
to increase awareness
• Supplier lack ability of
For Customers：
backward integration（do it
• Lots of supplier
themselves）
resources

• Get enough discount
for appealing
• Wide business
operation
For Competitors：
For Substitutes：
• Lower entry barrier（technology and capital)
• How to compete by
• The size and growth of industry
differentiation

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Groupon’s european competitor ：Groupola — a complete clone

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Global collective buying websites: a phenomenon

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Many Chinese copycats
The 1st Goupon clone in China mainlad
more than 50s
The No.1 C2C in China

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Deals Statistics: the latest 102 deals from Chinese
Groupon-alike websites
Category
Items
Orginal price
Discount %
Cost
Saved
Count %
Mean
Minimum Maximum Mean Minimum Maximum Mean Minimum Maximum Mean Minimum Maximum
Restaurant, Pub & Cafe
26 25%
187
10
466
29.69
10.00
50.37
64
4
198 123
6
292
Hair salon/ Makeup/
18
559
128
1876
20.87
4.69
45.38
96
10
188 463
100
1788
Massage
18%
Cosmetics
17 17%
203
50
650
43.40
9.09
64.32
69
18
138 134
21
585
Membership/ Ticket
15 15%
592
25
5218
28.12
4.22
60.00
91
5
348 501
20
4998
Training/ Class
6
6%
368
50
600
18.25
10.82
30.00
66
15
120 302
35
480
Photography
5
5%
1048
108
3000
18.78
6.98
30.15
260
9
880 788
98
2120
Coupon
4
4%
94
20
300
29.54
3.33
54.81
9
3
15
85
10
290
Medical / Dental
4
576
426
879
35.84
15.70
49.60
186
138
248 391
228
741
examination
4%
Flower/ Gift
3
3%
195
128
258
35.26
26.31
53.13
63
52
68 132
60
190
Appliances
1
1%
139
139
139
41.73
41.73
41.73
58
58
58
81
81
81
Designed Tee shirt
1
1%
178
178
178
16.29
16.29
16.29
29
29
29 149
149
149
Karaoke
1
1%
28
28
28
3.57
3.57
3.57
1
1
1
27
27
27
Wine
1
1%
398
398
398
34.92
34.92
34.92
139
139
139 259
259
259
Source: http://tuan123.net/pastTuan.php
04/28/2010 – 05/11/2010
• Main deals are Restaurant/ Pub & Café, Hair Salon/ Spa; Cosmetics; Tickets,
accounting for 75% in total.
• Cosmetics deals have highest average dicount.

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The chart of Chinese Groupon-alike websites
Website Lunched
Existing
Daily cost
Date
Days
Groupon Sold Daily average
Coupon Sold saved
Cost Saved
美团
2010-3-4
69
29,962
434
69501.97
4,795,636
F团
2010-3-15
58
29,794
514
41533.53
2,408,945
满座
2010-1-6
126
29,421
234
15941.60
2,008,642
拉手
2010-3-18
55
19,207
349
31956.35
1,757,599
优享团
2010-1-23
109
18,553
170
7471.72
814,417
团宝
2010-3-26
47
15,297
325
74599.64
3,506,183
团美网
2010-3-23
50
12,436
249
18509.96
925,498
窝窝团
2010-3-14
59
10,850
184
60040.78
3,542,406
24券
2010-4-6
36
6,813
189
11790.00
424,440
爱帮团
2010-4-22
20
3,091
155
12013.90
240,278
来客团
2010-3-26
47
1,566
33
3529.94
165,907
爱爱团
2010-4-5
37
1,549
42
1346.81
49,832
赶团网
2010-4-14
28
1,024
37
1652.46
46,269
酷团网
2010-3-28
45
821
18
6041.87
271,884
17团团
2010-4-26
16
623
39
4011.56
64,185
千折百扣
2010-3-2
71
458
6 1465303.96 104,036,581
丁狗
2010-3-15
58
435
8
718.59
41,678
火团网
2010-4-10
32
284
9
465.81
14,906
粉皮儿团
2010-4-20
22
79
4
362.68
7,979
団客
2010-3-23
50
38
1
48.84
2,442
阿拉团购
2010-4-10
32
26
1
64.34
2,059
团拍
2010-3-4
69
0
0
0.00
0
围团
2010-4-16
26
0
0
0.00
0
Masa
Maso
2010-3-17
56
0
0
0.00
0
Source: http://tuan123.net/history.php
04/12/2010 – 05/11/2010
•
Most website are new startup and have been operating less than 3 months;
•
Daily sales are relatively smal , general less than 500 coupon per day.
•
The operating areas are limited: Meituan.com 美团 only covers 3 cities so far: 北京、上海和武汉

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Taiwan
•
Launched since 04/12/2010
•
Operating in 台北，桃園 ，新竹，台中，台南和高雄
•
Saved： NT$1,970,669 ， daily average NT$65,689
•
17P customers who purchased：4，802 daily average 160 persons
To date 12/05/2010

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Collectively Buying E-commerce platform
Open source & commercial

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A substitute —— Adidas www.freestripes.com

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A substitute—— DELL Swarm

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THANKS

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