Question

In: Economics

Describe what Groupon is as a company (e.g. what type of E-Commerce it is), what its...

Describe what Groupon is as a company (e.g. what type of E-Commerce it is), what its business model is (e.g. how it generates revenues), what its current situation is, and how do you see its future?

Solutions

Expert Solution

Groupon sells a range of goods at deep discounts including fashion and beauty pieces, holiday packages, spa facilities, and bar and restaurant gift certificates. Although consumers can buy the same products directly from the companies offering them quite easily, Groupon often offers far below retail prices. In essence, Groupon acts as a powerful promotional driver, producing revenue and a stronger brand awareness in return for a fee for the company. While businesses earn less for products and services than they would usually charge, Groupon acts as an advertiser with tremendous scope, and merchants often benefit from not having to pay up front for the ads.

Groupon appeals to business owners by promising to boost foot traffic and to guarantee some sales. As the program began for the first time, Groupon sales did not become successful until a number of people signed up, and participating companies knew they had a minimum number of customers coming in. Groupon also markets products directly to consumers through its Product division, bypassing the coupon process entirely. Jet's Travel division offers travel packages to customers, including flights and hotel stays; some of these are sold through coupons that consumers may need to redeem later, and some are booked directly through Jet.

Following many years of decreasing sales, Groupon is seeking to turn the company around by shifting away from the highly priced coupon coupons that have made it popular with a less discount-driven user interface that promotes more normal usage. Groupon also invests in partnerships to increase the number of offers on its platform.

Groupon is phasing out its voucher system, in an effort to improve its customer experience. Historically, a Groupon user would pay up front for a deal and then download a voucher which might be redeemed for a good or service. However, the company recently introduced card-linked deals and booking requirements which enable a more seamless user experience. By making Groupon easy to use, the firm hopes that the app will be used more often by consumers.

Groupon also made changes to its legacy voucher-based coupon product by requiring certain coupon categories to book appointments. Booking appointments are instead a coupon voucher that aims to create a more natural interaction between clients and businesses. The bottom line is that Groupon has updated its core goods to improve the consumer experience and promote increased use. Groupon is actually on to because it has been monitoring its consumer behavior for years, and has a clear idea of what the product can change.

If not nurtured, a marketplace can be a fragile thing. If there are fewer people browsing for deal, businesses will find the marketplace less lucrative. When the website has fewer companies, customers won't find as many good offers as they like. Through making improvements in both buyers and sellers, Groupon is improving the marketplace 's wellness and providing a stronger consumer experience.


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