Groupon has received its fair share of media outrage. Some of this is due to firms loosing money on Groupon deals.
A vocal minority whines about Mason’s remarkable invention. They say they end up losing money on Groupon deals. They report that Groupon customers rarely become repeat customers willing to pay full price.
Image by JulieMarg via Flickr
Perhaps businesses should consider Groupon type deals as ‘paying for potential long-term customers’. On these lines, this post on Forbes suggests that businesses should give Groupon customers special treatment and reward them for returning.
Read more at Four Rules To Avoid Being Burned by Groupon – Forbes.
Groupon’s valuation of itself has halved. It plans to go public on 4th November and its latest filing sets a price range that will give it a $11 billion valuation. That’s quite a come down from the $25 billion it stated in June, but in sync with its restated revenues that are half of what they were initially supposed to be.
The daily deals company plans to sell 30 million shares at $16 to $18 a pop, which would see Groupon raise between $480 million and $540 million. This would give Groupon a valuation as high as $11.4 billion.
Groupon continues to have its detractors.
“It’s like watching a Ben Stiller movie and waiting for the next painful moment,” says Mulpuru, the Forrester analyst.
It has had to restate its earnings and faced several defections from its management team. It is fighting more intense competition and rising customer & vendor complaints. There are concerns over the conversion rate of its subscriber list and high subsriber acquisition costs (it spends 50% revenues to acquire subscribers and only 20% subscribers buy Groupons). There is also another problem …
Traditionally, investor money is used to grow a business before it goes public. But according to Groupon’s SEC filings, $810 million of the $946 million it raised went to early investors and insiders. That includes $398 million to Groupon’s largest investor, shareholder and executive chairman, Eric Lefkofsky.
“Taking this money raises questions about the integrity of the company and enormous questions about the quality of the management team,” says Mulpuru. “Groupon’s primary problem first and foremost is greed.”
Read more at Groupon To Sell 30M Shares At $16-$18 A Pop, Valuation As Much As $11.4B | TechCrunch and Groupon’s fall to earth swifter than its fast rise – Yahoo! Finance.
Facebook Deals was quietly buried last weekend. And no one has really noticed. AllThingsD says that FB Deals was a trial – a successful trial that FB was not willing to invest more into. Sounds like the HP TouchPad kind of trial that is becoming popular these a days.
This news may help Groupon with its IPO. It also gives ammo to folks who say that tech companies should focus – just because you are a great tech company, doesn’t mean you can do anything digital.
But our sources say that sales were meeting expectations, and that Facebook ultimately slashed the group because of limited engineering resources that could be used for better purposes.
One source said that it was a trial with a beginning and an end, and that in the end it wasn’t an actual strategic product of the company. Another source also said that Facebook wasn’t willing to contribute any more resources to it.
Facebook Deals May be Gone, But It’s Not a Reflection of the Industry – Tricia Duryee – Commerce – AllThingsD.
Image via Wikipedia