Groupon must fight hard to become a “hot deal” again.

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The high expectations raised by internet retailer Groupon at its Initial Public Offer (IPO) just a year ago met sobering realities. Panos Mourdoukoutas explains in a series of articles in “Forbes Magazine” why the company has so many difficulties.
A year ago Groupon was listed on the stock exchange, cherished by many as the first major internet company going public with an innovative idea for many years. Its name comprises this idea as an acronym (Group, on, coupon). In its famous “daily deals” Groupon tried to bring groups of customers together which, if sufficient in size, would get a product with a significant discount for which the company gave out a coupon. However, since last year stock value has lost 85 percent going down from US$ 20 to around US$ 3 in hectic trading during the last days. A significant gain in revenue did not help to prevent further downgrades by analysts. Revenue in the US grew about 30% but remained behind expectations and the entry into other markets proved difficult and costly. Now many commentators including Panos Mourdoukoutas and Julianne Pepitone question the business model which has some disadvantages compared to other online market places. There is no continuity with regard to the products offered, the buyer depends on a group and cannot buy spontaneously. Panos Mourdoukoutas proposes that Facebook should buy Groupon which could bring social buying processes and social media closer together.
Groupon suffers from the fact that everybody loves a “hot deal”, but many household products do not fit into such an approach and more sophisticated products are sold through other channels. With permanent “always-on” products Groupon now tries to bring more stability to its product portfolio. However, by doing so it risks losing its former “hot deal” focused buyers and enters a market in which big players like Amazon beat the drums.