Are you solving a legitimate problem?admin | Friday, July 29th, 2011 | No Comments »
The sucess of discount buying sites like Groupon is premised on delivering value to buyers in the form of time bound discounts.
With Groupon and its clones everywhere it would seem they are serving a legitimate and compelling market need. However, I don’t believe that thier business model is a sustainable one.
Groupon has a two-sided business model that relies on willing retailers as well as willing buyers. Without the ongoing support of retailers there is no repeatable business model.
I for one can’t see retailers continuing to support a model that uses price as a differentiator and that is disconnected from the specific strategies of individual retail businesses, and retailers seem to agree. One recent survey indicates that less than half of those businesses that have issued a Groupon would do it again.
In my book this is simply value destruction, and unsustainable.
No related posts.