How The Hell Can Groupon LOSE Money?

[dougs]

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Just read this so sorry for the delay:

We launched deals gently a few months ago to our 7 million members and it's an interesting game

Plus points
Deals do work, we have seen numerous sales where we have done 1000 sales plus.
The margins are also very good.
Loads of merchants are adapting to how to make money from this arena

Negative Points
Logistical nightmare sometimes if you are also trying to keep the merchant happy
Unsubscribe rates even though not huge are higher than normal, especially if you get segmentation wrong
Huge amount of resources involved in doing analysis of data and people.

Conclusion
To us it's a great business and we will do more, but we are very lean and tight. Plus we already have huge email database and traffic levels....so it's Christmas money to us
Groupon once they get their costs under control and segment properly will be a cash machine.....but I doubt the valuation of the company is realistic. $5 billion I could understand, but not $15 billion


Doug

[nicksthename]

I can see how it would work well for you Doug as a 'bolt-on' to your existing operation - you can afford to work with a small number of merchants. But I just can't see how it can be scaled up to the level that Groupon need it to be, with the current structure.

But time will tell!