What is Groupon Business Model?

Business model should be the overall concept one should think about if they want to start running up their own business. People can either find a new model, duplicate the old one, or do the same thing differently.

Because Cambodia is on the brink of online market, it may be very useful to learn some online business models, implementing around the world. That is why Groupon Business Model has been chosen to be a topic for today.

Groupon is the daily deal website which issues the discounted gift to customers in particular products and markets throughout the country, first operated in Chicago. In July 2010, Groupon was chosen for the cover of Forbes Magazine that reads “Groupon Is The Fastest-Growing Company … Ever: The New Web Phenom.”

As of the same year, it has served in over 150 markets in North America, and 100 markets in Europe, Asia and South America. The idea was originally from its founder and CEO, but now ousted, Andrew Mason. It started the operation in 2008, and gained 1 million dollar seeding money from Andrew Mason’s former employer, Eric Lefkofsky who has a sharp interest on it. On April 2010, the company was valued of up to $1.35 billion. According to The New York Times, Google used to has offered $6 billion for this company, but was turned down.

What Groupon simply does is to make the deal with the businesses in a particular market to issues the coupons, and Groupon uses its online channels, the emails and their websites, to let people know. However, the main channel they had used instead to promote their ideas and websites are social network sites such as tweeter, bebo, flickr, and facebook. Initially, Groupon focused mainly on female customers, specifically in health, fitness, and beauty markets before they spread to various markets. The coupons provided usually go for a limited number within 24-hour validity. Groupon often earns about 50% of the deal the customers pay for the coupon. For example, they issue the 50% coupon for massage valued at $ 60 for 10 people on Sunday, 12th 2013, then the first 10 people who accept the coupon would have to pay for $ 30 each, and about $ 15 from this $ 30 will go to Groupon Company.

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Groupon idea looks very good for the customers since they love discounts especially in the tough economic time. However, based on the research by The Rice University’s Jesse H. Jones Graduate School of Business, about 30 % of the merchants reported it is not a profitable deal for them.

There was also a turnaround for Groupon. According to Businessinsider.com, Groupon went public for the first time with their share at the value of 20$ per share which then can be bought at less than 6 dollars a share in March 2013 which left its future reluctant.

No matter what, important question for us is if this could be done the same in Cambodia. If not, is there any way we can adjust the model and make it work in Cambodia? If you were to have enough resources, would you start this similar in Cambodia?

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