Groupon

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Groupon | Collective Buying & Social Marketing

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I. Groupon Profile • Background • Business Model and Operation • Additional Marketing Methods • API II. Study the business model of Collective Buying • A Six Forces Analysis Tuán Gòu 团购 Collective buying Store mobbing

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GROUPON COMPANY PROFILE

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Company Profile： • 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 Partners New Enterprise Associates $135M • Established：10/08 • Industry：Advertising and Marketing • Employees：225 （from LinkedIn） • Operation： – Subscribers 4,400,000+ – Total Groupons bought 4,600,000+ • Media exposure：

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Business and Operation

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Business Model：a form of Re-intermediation Groupon negotiate with suppliers/ retailers to offer deals； • Groupon promote deals and gather customers via its marketing channels； • Groupon sells 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 ~ Accessories ~ Automotive ~ Beauty ~ Beer, Wine, and Spirits ~ Diet and Fitness ~ Electronics ~ Entertainment ~ Fashion ~ Health & Pharmaceutical ~ Financial ~ Travel The place of AD banner

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Current sales：an analysis of 108 featured deals 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 virusspreading 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 eyeballs, 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 ? 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)

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Demographics of web visitors Data

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

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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 For Supplier： • Large customer base, ability to increase awareness • Supplier lack ability of backward integration（do it themselves） For Customers： • Lots of supplier resources • Get enough discount for appealing • Wide business operation For New Entrants： • pioneer advantage （Brand awareness/scale economics） • Funding advantage • Business developing ability For Substitutes： • How to compete by differentiation For Competitors： • Lower entry barrier（technology and capital) • The size and growth of industry

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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 more than 50s

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Deals Statistics: the latest 102 deals from Chinese Groupon -alike websites Category Items Count % Orginal price Discount 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 Most website are new startup and have been operating less than 3 mont0h4/s1;2 /2010 – 05/11/2010 • Daily sales are relatively small, 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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