Day two has come and gone for trading in Groupon, one of the most anticipated and talked about IPO’s in quite some time. Shares closed 13 cents lower than Friday’s close and volume was only 20% of Friday’s impressive number.
Being heavily involved in the daily deal industry, it has been an interesting experience seeing Groupon grow and flourish so incredibly fast since their launch back in November of 2008.
Are they going to continue flourishing?Are they sustainable against the hundreds of competitors (many of whom are our daily deal clients running from DDB’s deal software platform Daily Deal Builder)?
My personal opinion is that Groupon may not be the wisest company to invest in for the long haul. This statement, of course, is only a guess of mine based on not as many facts – but rather a few concepts like:
- Groupon doesn’t have any real sense of “community“, like Facebook or one of the other social sites. People are free to leave and find deals from wherever they want.
- Most people are not loyal to Groupon. They are simply loyal to deals. There are deals everywhere you look and people are realizing this at an increasing rate.
- Companies like ours, www.dailydealbuilder.com & www.dodaggregator.com, that provide platforms and deal software; dramatically lower the barrier to entry to start and launch a successful daily deal website or daily deal aggregator website. Thus equating to more competitors and an increase in advertising costs.
Now, I do know a few other important things to take into account:
- People love getting deals. It just feels good and we also enjoy sharing the fact that we got deals. It taps into a core psychological behavior of most of us humans.
- Most merchants have always and will continue to offer some sort of deals and / or coupons to encourage and acquire new customers. This has literally been going on since the beginning of time in some shape or form.
- There will always be an opportunity to provide some sort of medium to connect the people getting deals, and the companies who desire to offer coupons and deals to acquire new customers.
We will see how things pan out for Groupon over the next year or two. I am personally rooting for them.
Feel free to leave a comment below if you feel strongly one way or the other.
Marc Horne
HC Consulting Group
