How Groupon’s IPO will change the deals site

A not-so-quick flip through Groupon’s 269-page IPO prospectus turns up some clues as to what ordinary people in search of deals can expect from Groupon after the deal site raises an estimated $750 million.

More deals per day, targeted to your location, preferences and purchase patterns. Last year, when the company exploded into popularity, merchants waited up to nine months for a shot at Groupon’s one deal per day in each city. Now, the prospectus says, customers are served deals based on where they are and what they like.

Related Story: Group buying sites mature as huge market size becomes clear

Location-based offers. Groupon NOW, in test in selected cities, allows merchants to push offers to people’s mobile phones in real time, based on proximity. If you’ve ever stood in front of a restaurant’s menu board and thought, “Boy, I wish I had a coupon for this” – or owned a restaurant and wondered how to get 25 more covers in the middle of a slow night, you may be about to get your wish.

Browse our selection of new, free, tablet-friendly digital editions

Fending off the competition. Nearly 500 sites offer Grouponesque discounts. Google Offers launched this week in Portland and Facebook and Microsoft have similar programs in the works. Some of that $750 million could go toward coming up with the next big thing, sweetening the pot for shoppers, or cutting costs to keep merchants happy.

Buying the competition. Consolidation always follows insane growth in any industry. With a sizable budget for acquisition, Groupon can at least compete with deep-pocketed latecomers to the deal space, like Facebook and Microsoft, for the best acquisition targets.

Different kinds of deals. Groupon focuses on six broad categories: health and beauty and food/beverage make up more than half of all offers, with retail, services, activities and events splitting the other half. Expect growth in several of those categories — the company just partnered with Live Nation for Groupon Live, which discounts event tickets – and new kinds of deals. Cars? Airfares? Real estate? It’s wide open.

More national deals. Nationwide offers aren’t as profitable for Groupon, but they rope in new customers. Groupon’s first national deal, a half-off coupon for the Gap in August 2010, sold 433,000 copies, of which 200,000 were the buyer’s first Groupon purchase.

Offers by category, not location. Deal Channels, another program in test, aggregates deals into categories. Right now the channels include home and garden deals, and event tickets and travel deals.

Relationship marketing. Says the prospectus: “Consumers will use Groupon not only as a discovery tool for local merchants, but also as an ongoing connection point to their favorite merchants.”

More overseas deals. Groupon bought CityDeals Europe about a year ago to get into the international business, and now more than half of Groupon’s revenue comes from overseas. If you’re heading to London, Tokyo or one of Groupon’s 42 foreign markets this summer, you should be checking those cities’ Groupon feeds for places and experiences you want to include.

More Groupon deals in targeted search results. Online marketing makes up most of Groupon’s subscriber acquisition costs, which ran $241.5 million in 2010 and $179.9 million in the first quarter of 2011. With a newly renewed war chest, you will see their brand approximately everywhere.

Maybe a job. From a handful of employees in Chicago in 2008, Groupon now employs 7,000 people around the world, including 925 writers and editors. On behalf of my beleaguered profession, I thank them.

Would you recommend this article?


Thanks for taking the time to let us know what you think of this article!
We'd love to hear your opinion about this or any other story you read in our publication.

Jim Love, Chief Content Officer, IT World Canada

Featured Download

Featured Story

How the CTO can Maintain Cloud Momentum Across the Enterprise

Embracing cloud is easy for some individuals. But embedding widespread cloud adoption at the enterprise level is...

Related Tech News

Get ITBusiness Delivered

Our experienced team of journalists brings you engaging content targeted to IT professionals and line-of-business executives delivered directly to your inbox.

Featured Tech Jobs