It1004 Discussion 1: Groupon

Slides for Week 2 tutorial, where we are discussing Groupon's business models, the demise of Groupon, the Dotcom Bubble and inflated IPO shares.

Transcript

1. Discussion 1 Is the Groupon Business Model Sustainable?
2. What is Groupon’s Business Model?
3. Value Proposition •  Customers –  Ease of purchase (one- click) –  Social Shopping (network effect) –  Lowered prices (‘good deal’) •  Merchants –  Increased Market Exposure –  Opportunity to capture surplus (move slow- moving stocks / recover sunk costs in services)
4. Revenue Model 50% commission
5. Market Opportunity •  Carves out new market segment – Price-sensitive customers who, without a discounted price, would not have purchased otherwise – See Long Tail
6. The Long Tail
7. Groupon, Y U No Sell?
8. “Belief” in Groupon •  Booming Business – Claimed ‘first mover advantages’ in online collective buying NOT TRUE – Could not figure out its business life cycle NO EXIT STRATEGY
10. What are the flaws of Groupon?
11. Merchants •  1/3 of the deals were unprofitable •  Zero customer-retention (repeat customers?) •  Merchants only paid 3-month installments –  BAD NEWS for cash-strapped merchants •  Zero help / initiatives to help merchants in post- sales •  No systemic validation of coupons in place
12. Customers •  No transparency of information – Dodgy fine-prints (Legal but ethical?) •  Zero post-purchase services
13. Additional Discussion
14. Gartner Hype Cycle
15. The Dotcom Bubble •  1997 – 2000 •  Height of E-Commerce (e.g. Pets.com, Webvan) •  Greatest dotcom disasters
16. R.I.P Webvan.com Passed away reluctantly, 9 July 2001 “they had to build a reputation from scratch, compared to Tesco, and other supermarkets.” “Blind ambitions killed the fat cat.” “Too scattered customers, too few vans.”
17. E-Commerce Sites Overhyped?