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Our first post is by Vicki Thomas- Groupon is in the news more and more these days and particularly so with the rise in competitors in its space including Livingsocial and Wagjag.All three companies offer daily deals that include categories such as restaurants, travel, clothing, and salons.
Then the merchant would send Groupon the list of redeemed codes.
I get a daily Groupon email and I’ve never bought a deal.
Perhaps I’m jaded and I’ve read too many articles about how Groupon has hurt small businesses or maybe I’m simply not an impulse buyer?
Assuming we are talking about the original business model, not Groupon Goods, the short lived Groupon Now and whatever else they have been attempting to do with Breadcrumb etc, it’s more complicated than what people think, but it’s also genius. The single best one though is, ““ Most deals don’t make money – the big ones do very well Firstly most of the money comes from epic, big discount, high price deals. The sales guys who figure out the great deals can do really well. Ticket price To make money you need to either have massive volume, or decent volume and a high ticket price. If you do healthcare related things like teeth whitening, IPL etc, you can easily get to 800, up to a few thousand. Big discounts Big, attractive discounts get deals done. High distribution meant the sales teams were ‘margin fighters.’ This meant you fought for every basis point.
The first one they did, to Ibiza I think, made them well over a million dollars. You used to solidly sell these, but you don’t get crazy money. Once Groupon figured out that they could do deals in areas like travel, entire teams were set up just to do these. A 75% discount on a brand name hotel was a good deal! Occasionally you would get Starbucks or other big names. Groupon’s margin There was huge pressure to have high margins. They would make margin distribution charts to see the range of margins that were achieved.