Groupon is bad for business – no April fool

Fri, 01 Apr 2011 00:00:00 +0000

According to BusinessWeek, Groupon could be the fastest growing business of all time – going from zero to rejecting a rumoured six billion dollar offer from Google two years later on the basis it seriously undervalued the company. It’s now eyeing up a twenty five billion dollar IPO. Not bad for a discount voucher business.

My sister-in-law recently bought a £300 spa package for £100 via Groupon. Haircut, massage, manicure and pedicure. She’s delighted.

“Would you go back to the spa?” I ask. “Definitely” she replies. And then came the qualifier, unprompted: “When they run another Groupon deal.”

In other words, the spa in question secured a transaction and eliminated themselves from building a mutually-valued relationship. My sister-in-law will now find it impossible to value the service in her mind at £300, or indeed much more than £100. And with Groupon taking 40-50% commission, it will have been a loss-making transaction at that (following standard accounting principles).

Transactional on Philip Sheldrake

Groupon is bad for business – no April fool