Groupon Essay

1233 Words 5 Pages
Case Analysis Groupon
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
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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 merchants. The merchants also experienced issues with consumers leaving inadequate tips for restaurant meals. The voucher lowered the overall tab and provided a new base to assess tips. The merchants felt with the unknown and unpredictable staffing and product requirements, the revenue fee that Groupon charged, and the staggered receipt of cash, the

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