Groupon is an internet website company focused on generating revenue by utilizing relationships with merchants to provide consumers with discounts on select items. The goal of the discounted vouchers is to drive additional consumer store traffic and generate revenue for merchants which are shared with Groupon via a predetermined contractual percentage. Groupon generates visibility and exposure with email and social networking to increase consumer spending at specific merchants. Groupon has many features from personalization of product offerings to specific demographics and target segments. In addition, a more defined value proposition allowing merchants an opportunity to showcase their own product offerings on the …show more content…
The merchants were also allowed the opportunity to designate the timeframe for the voucher, expiration period, and any limits on overall purchases. Groupon honored 100% of any discrepancies. Groupon’s research data illustrated that 95% of the merchants were happy with the Groupon program, and 96% would recommend the service to others. The negative for suppliers and retailers were Groupon controlled the exact launch date and timeframes for the available purchases. The merchants were required to plan accordingly to staff the product and resources not to affect the normal day to day business. The unknown of when the vouchers would be launched and more importantly utilized, placed a significant burden on small local merchants. Groupon also processed all online consumer sales and distributed the revenue disbursements in payment installments to the merchants. The payment installments ranged in cycle time from 5 to 60 days. The staggered payment installments would affect the cash flow operations of smaller …show more content…
The company’s growth in the US and internationally has diluted the overall brand versus strengthening. The training of the sales team is limited and poor, and customer service and IT failures have provided negative exposure. The poor delivery has a negative effect on Groupon. The major negative factor to Groupon’s longevity is the minimal barriers to entry. Competition is fierce and major telecom players Google, Microsoft, and Facebook are developing their own type of discount voucher system. The telecom companies have the clients via social networks and email users. Groupon is strictly relying on the consumer experience will drive additional repeat business. Groupon’s lack of planning for innovation will soon experience significant hardships in customer retention and expansion. The outflow of cash for market and advertising expenses far outweigh the incoming revenues being shared with Groupon. In addition the merchants will get offered better deals related to exposure, timing of release and revenue sharing from the telecom companies with the larger number of email subscribers. I have severe doubts the business will continue to grow based upon competition. The recording of revenue and expenses are another major challenge that accounting firms are evaluating and questioning. Perception is reality and the perception is Groupon is hiding expenses and