Tag Archives: groupon

The Locust Economy

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Once locusts acquire an informed kind of market mobility through better discovery mechanisms, they can range over a much larger area of wheat fields or restaurants. You can continuously derive savings at the expense of other economic actors wheat farmers or restaurant owners.

via The Locust Economy.

To take coffee shops as an example, an unending supply of idealistic wannabe cafe owners enters the sector every year, operates at a loss for a few years, and exits. The result is that even under normal business conditions, without swarming locust consumers, this is a loss-making business with an extinction rate of around 90% at the 5 year point in the US. Starbucks has the scale to be profitable and resilient. Locust coffee drinkers happily drink the excellent, loss-making coffee from small, local Jeffersonian coffee shops and callously retreat to Starbucks or DIY homebrew if the prices go up.

Starbucks survives, coffee drinking grasshoppers survive, small coffee shops go in and out of business.

Groupon loyalists are spending more time on the site, which could lift results

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The company has been experimenting with creating the same kind of marketplace as Amazon.com Inc. and other e-commerce companies in hopes of getting its customers to shop on its website without relying solely on an email prompt.

via Groupon loyalists are spending more time on the site, which could lift results – John Pletz Technology Blog – Crain’s Chicago Business.

So they’re going to compete with Amazon.com.  Good luck with that.

Why Groupon and Living Social Are Doomed

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This effect has been confirmed empirically by a team of marketing researchers who tracked three businesses for a year after they offered a social coupon. All three companies lost money the month they offered the coupon and will have difficulty earning it back. According to analysis done by the two researchers,
V. Kumar and Bharath Rajan, the companies would need 15, 18, and 98 months (almost eight years) to earn back their lost profits. The reason? “The three businesses had difficulty retaining most of the new customers who were attracted to the coupon offers,” the two researchers wrote in the MIT Sloan Management Review.

via Why Groupon and Living Social Are Doomed – The Daily Beast.

Groupon Sued With LivingSocial Over Mobile Ad Patent

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XcellaSave Inc. is seeking a jury trial and unspecified damages from Chicago-based Groupon and Washington-based LivingSocial, according to two lawsuits filed yesterday in federal court in Delaware.

via Groupon Sued With LivingSocial Over Mobile Ad Patent – Bloomberg.

As if Groupon doesn’t have enough problems.

Update: I missed this on August 1 from Techcrunch.

Groupon shares fall 27% on disappointing results

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Meanwhile, stiff competition from rivals such as LivingSocial, Amazon.com and Google, may be compressing margins, by offering participating merchants higher shares of deal revenue. Gross margin in the second quarter fell 2.4 percent from the first quarter, to 76.2 percent.

via Groupon shares fall 27% on disappointing results – chicagotribune.com.

Revenue from Groupon’s international business fell 4 percent in the second quarter from the first. The international business accounted for about 54 percent of total revenue in the second quarter.

Groupon Buys Ditto

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Groupon has acquired Ditto.me, a startup that has been offering a location-focused mobile app. Terms were not disclosed.

Ditto is a sort of combination check-in service, recommendation engine and chat app. “See what your friends are doing, when they’re looking for a friend to join them for coffee, what movie they’re going to see, and what their evening plans are,” the company explains on its website.

via Groupon Buys Ditto – Forbes.

Groupon reveals lower revenue, admits internal controls ‘weakness’

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In its SEC filing, Groupon said it sets aside a refund reserve by applying a financial model based on refund patterns from previous deals. The problem with this approach was that refund behavior started changing in late 2011 as the company introduced higher-priced deals, which required commensurately higher refund payouts when customers requested returns. Groupon was still modeling the size of its allowance on lower-priced deals.

via Groupon reveals lower revenue, admits internal controls ‘weakness’ – chicagotribune.com.

Groupon scoops up Silicon Valley startup Adku

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Adku was founded in San Francisco a year and a half ago by a group of former Google employees. It specializes in using data to craft personalized shopping experiences on the Web and has financial backing from high-profile venture capital firms such as Greylock Partners and Battery Ventures. The latter firm is also an investor in Groupon.

via Groupon scoops up Silicon Valley startup Adku – chicagotribune.com.

From www.adku.com

Adku started a year and a half ago from our passion for big data and a desire to create products that would instantly and automatically give users a more personalized experience. We had ambitious goals and some of the most rewarding and busy days of our lives. We were also fortunate to assemble an amazing team of engineers and investors and create something special.  

LivingSocial Now At 5,000 Employees, Half The Size Of Groupon

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A few days ago, at the DLD conference, Groupon CEO Andrew Mason revealed that his three-year-old daily deal company now has 10,000 employees, with about 70 percent overseas. What about LivingSocial, the No. 2 daily deal company? Tim O’Shaughnessy told me yesterday the company is now at 5,000 employees worldwide, with “just under half” in the U.S.

via LivingSocial Now At 5,000 Employees, Half The Size Of Groupon | TechCrunch.