Tag Archives: Groupon

Groupon is laying off 1,100

I have never been a fan of Groupon, and when I say that it is not as a customer. Groupon has a business model that really makes the customers big winners in this game. Nothing wrong with that, but it is the businesses that is paying for the show, and they don`t want to lose.

The stock has been hammered. Take a look at the chart below.

GRPN

Groupon Inc operates online commerce marketplaces worldwide that connects merchants to consumers by offering goods and services at a discount. Groupon offers deals on goods and services in three categories: Local deals (Local), Groupon Goods (Goods) and Groupon Getaways (Travel).

Its deals are accessed directly through its Websites, mobile applications and search engines. It`s impressive to see that Groupon grew from $312 million to $3,19 billion from 2010 to 2014. But now, it seems like the glory days are over.

What have happened?

First of all; in my opinion, the biggest winner in this game is the customer. Who are saying no to a great deal? No one. The customers are not paying to Groupon. They are paying to Groupon`s customer, which is the most important thing for Groupon. No customers – no income.

Groupon`s customers need to cut the bill in half. Voila! Groupon`s customer have already lost 50% of the original price. The end customer is satisfied of course, because who say no to 50% discount? The end customer pay to Groupon`s customer, but out of that, another 50% must go to Groupon, which means there is only 25% left to the supplier.

It could have been a good way to promote the business, but it seems like the end customer is the big winner. It depends on what business it is but customers who are paying for the products are not loyal. They will hunt for other discounts other places.

Not only that. Groupon has got a lot of competition from other companies. They are attacked from all sides. They have competition from e-commerce platforms like Amazon, Alibaba and eBay to name a few.

Not only e-commerce platforms are doing the same. Social platforms like Twitter and Facebook have both launched their own «Buy now» buttons. Again; customer are the big winners. Discount here and discount there. Discount everywhere.

Let`s say you sell product A for $1000. If you have your own customer base on Facebook, you can start a 50% discount campaign and still have 50% left without giving half of that to Groupon. It doesn`t matter for your customers, because they have 50% anyway, but it matters to you.

The management need to do something very fast.

Groupon announced it would cut 10 percent of its workforce and cease operations in some areas overseas. The company still have a lot of cash, and in a filing with the SEC, they says the restructuring will require a one-time charge of up to $35 million.

What they need to do is start focusing on their customers. Not their customers customers.

 

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Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication. UA-63539824-1.

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Risky business

Copper is in red territory today, town -2,03%, followed by Crude oil (brent), which is down -0,80%. Gold and silver is up. Asia is trading down today. Hang Seng is down -1,75%, Shanghai is down -2,86%, while Nikkei closed down 1% at 15,120,14.

Asian markets tumbled today. People are worried about the Ukraine crises and some are disappointed about the surprisingly weak Chinese trade data released today. All this, despite the surprisingly good news from the U.S on friday. Nonfarm payrolls was better than expected.

The commodity-sensitive Australian and Canadian dollars suffered today, as copper of which China is a major consumer, reached a four-year low in Shanghai. Australian and Canadian dollars lost half a percent against a steady U.S dollar. The Chinese yuan opened down 0,5%.

Groupon Inc (Nadaq:GRPN), is still the market leader in the daily deal voucher sales, but the stock is declining while this stocks seems to be a risky stock. Most of the Groupon`s customers are often struggling merchant partner who can`t afford to pay.

In worst case, if many of them go bankrupt, then Groupon will lose a lot of money. In addition; Groupon will pay back the customers if the merchant fails, and unused vouchers has increased to $725 million.

Merchants need to offer discounts of 50%, and share 50% of the rest with Groupon. As you know, this is a risky business. Merchants do not earn money and have no control if too many vouchers are issued.

Groupon say they are «the morst effective local advertiser tool» available for marketers, but I think that the shoppers are the winners here. Mainly because the shoppers are one-time shoppers looking for good deal, better called «coupon hunters», which is not loyal repeated customers.

This can be a ticking bomb, and the stock is now trading at $8,60. The stock will open down today -0,58%. The stock is down -67,16% from the top, and so far this year the stock is down -26,90%. Groupon shows us that not everything in the social space is rosy.

Revenue growth and user growth is the king in the stock market.

Groupon logo

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Shiny bull. The author has made every effort to ensure accuracy of information provided; however, neither Shiny bull nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in precious metal products, commodities, securities or other financial instruments. Shiny bull and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.

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