Why Groupon May Fade, but the “Groupon” Will Never Die

Why Groupon May Fade, but the “Groupon” Will Never Die

A week before Groupon’s now infamous IPO was announced, the New York Times wrote a touching introspective on the company. Titled “Funny or Die,” the article suggested that Groupon’s success hinged on a simple and familiar commodity: words.

Anyone who has signed up for Groupon’s mailing list has been exposed to the cheeky, sometimes funny, always irreverent write-ups that accompany the company’s deals. With a touch of banter, wit, and ironic pop culture references, the company hocks its wares. The New York Times insisted that these write-ups were the secret to Groupon’s success and the source of its profound and sudden wealth. The wit and humor of these write-ups made the company stand out from its many competitors, Times report David Streitfeld insisted: the company’s attitude “reformulated spam into something benign, even ingratiating”. The result: a company valued at near $30 billion.

The rather sensitive and compassionate article painted a picture of an artist’s paradise. One fact-checker says that Groupon pays the bills, but his real passion is his work as an assistant director at an acting conservatory in Chicago. Another editor is also a comedy writer and performer. Groupon’s hope is that this creative energy will make it more valuable than its competitors. Eagerly, Streitfeld agreed.

Of course, Groupon has had its critics. One of the most vocal has been Techcrunch, who have attacked the site’s business model, its technical approach, its writing, and its basic product: the crowd-sourced coupon. More austere warnings have come from stalwarts at The Economist and Wall Street Journal, observing the razor-thin margins of the company are shrinking while revenue numbers are lackluster for any company, let alone one with a valuation exceeding several blue chips.

Both praise and criticism of Groupon tend to focus on the company itself with only offhand observations about competitors such as LivingSocial and BuyWithMe, who have adopted the model and offered better terms to merchants in the hopes of attracting more attention. The success of these companies, even if they lack Groupon’s unique “wit,” suggests that there is more to the success of the Coupon 2.0 industry than mere words. So what is it?

What is often ignored is the fact that the “groupon” as a concept is here to stay. Coupons have been at the heart of American consumer culture since Asa Candler first mailed coupons for free Coca-Cola in the 1890s. Until Groupon, they remained a largely paper ordeal and were distributed much like products–from producer to consumer. This model is inefficient because the coupon does not respond to consumer demand. It is offered, and consumers can take it or leave it. Producers can study the popularity of their coupons when making future deals, but such marketing research is tedious and time-consuming. The Groupon, however, brings the speed of auctioneering and the efficiency of crowd-sourcing to the world of discounting. The result is a more efficient coupon that targets those who want it and helps promotions respond to demand in real time.

This crowd-sourced coupon is often called a “daily deal”, but this is a misnomer. Groupon’s recent foray into instant local deals (called “Now! Deals”) is making the groupon more central to the consumer’s experience. Groupon’s newest venture–its iPhone app–is making the groupon even more ubiquitous. The app has two buttons: click one if you’re bored, click one if you’re hungry. Using groupons is becoming more convenient than not.

It isn’t a daily deal anymore, and it isn’t really a coupon either. I call it a “groupon.” So does almost everyone else. No matter what other sites call it, it will always be a groupon in the public consciousness, just like a cotton swab is a Q-tip and a paper tissue is a Kleenex. This is a strength for Groupon, but the success of LivingSocial and BuyWithMe prove that words are not enough. If the company cannot alter its business model to increase revenue and reign in its overzealous expansion, it is going to fizzle out. If the company succeeds in making its groupons more convenient for consumers, it will thrive. But words will not save it.

This post was written by Jim Muehlhausen

Fortunately or unfortunately, I have several high-quality writers for this position. Thank you for taking the time to apply. It is very difficult to choose, so I have an unique idea- I would like the applicants to all write a similar article and see which one best fits with our site.

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Like an unchecked cancer, hate corrodes the personality and eats away its vital unity. Hate destroys a man’s sense of values and his objectivity. It causes him to describe the beautiful as ugly and the ugly as beautiful, and to confuse the true with the false and the false with the true. -Martin Luther King Jr.


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