Last November, coupon firm, Groupon made big headlines when it was reported that they turned down a $6 billion offer from Google. Many were shocked that Groupon didn’t take the cash and make a run for it, after all it was Google and it was 6 Billion dollars! They apparently believed they were worth much more, and good thing they did. In just a short four months Bloomberg reported that Groupon is talking with banks about an IPO of potentially $25 billion. Talk about four times the profit!
But the question of the hour stands – Is Groupon really worth $25 Billion? With everything pertaining to the social media world, perception is key. If enough people believe Groupon is worth $25 billion, then it will be. The more money that is spent towards Groupon by consumers, the more valuable the company will become. Realistically speaking, this coupon firm has the potential to grow even more if they wanted to. If they were to segment themselves out to various geographic markets, they will give their company that competitive edge over the other smaller companies with similar business models. Although some may believe that small businesses wont be competition, you would be surprised by the amount of damage they can possibly do. Smaller businesses are more capable of offering what Groupon offers at half the price to local retailers, potentially obtaining a vast amount of the market share.
Alternatively, Groupon can also get affected if leading competitors like Google, Facebook, or Amazon decide to take on Groupon and offer the same kinds of services through their company. If any of these big players decided to take on Groupon, they will most likely dominate the scene. It is all about the name in this kind of industry, and these players have already established themselves.
So whether it’s a small business taking Groupon on for their money, or a larger one like Google completely wiping their presence off the scene, Groupon has a lot to consider. But first, I believe they should consider whether or not they would want to take Google up on their $25 billion offer.
You're totally right about competition causing damage. Local businesses are able to cater better to its nearby residents and allow for those same businesses to able able to keep their customers for the long run better than groupon probably could.
ReplyDeleteYou're also right, perception is reality, and if consumers continue to help investing in Groupon it could potentially reach the 25 Billion dollars it is supossedly worth. I think It might be a smart idea to look into possibly partnering up with the bigger more widely dominant companies as a means of ensuring their survival and success in the future. Having google as a partner can mean that they could avoid getting cut out of the race completely if Google should decide to enter itself in this with fullforce.