Wednesday, September 21, 2011

The Fastest Growing Company in Web History: Groupon

Groupon, a company that mixes the words “group” and “coupon” as their name, is a “deal-of-the-day” website that provides its customers with discounts on products and services. Groupon, founded by 29-year-old Andrew Mason, has become the fastest-growing company in Web history. Groupon’s business offers great deals to its customers for local products and services. The way Groupon’s business works is businesses use Groupon to get their deals out to people. Subscribers of Groupon get an email a day of a great deal in their local area and if they like it they can purchase it.

You might be asking yourself, well why would businesses want to use Groupon? The answer is the exposure. When a business uses Groupon, their deals are advertised for cheaper prices. This allows more customers to use them to buy their products or use their service.

I recently bought a Groupon that was $50 worth of food for $20 at a close by Hibachi restaurant that I did not even know existed. That is a $30 savings. I would have been unlikely to go to this Hibachi place because it had not been well advertised and Hibachi food is usually kind of expensive. By having a Groupon, I was able to get a great meal for a cheaper price.

Groupon is a great advertising tool for businesses because they get more customers, which means more revenue coming in. Going along with this point, when customers enjoy a product or service, which they should because they are getting it at a discounted rate, they are most likely going to go back and buy the same thing again. Groupon is able to advertise through Google and Facebook. Groupon sends out an email a day to 6.5 million people. If they like the deal they can go ahead and purchase it. If not enough people buy the deal it is canceled. This gives Groupon feedback as to what their customers want. It can also be a major drawback if someone believes they are about to receive a great deal, and then it is canceled.

Groupon has now grown quite a bit. As of now, they have expanded into 43 countries and have more than 7,000 employees.

According to the article, Groupon was on pace to record over $500 million in revenues last year, which is something that no technology company had ever reached that fast. Not even Google, Amazon, Yahoo, AOL, or Ebay. In 2010, Groupon was valued over a billion dollars. The only company to reach that mark faster was Youtube. It was reported that in December 2010, Google offered $6 billion to buy Groupon. The offer was reportedly turned down.

Groupon has become so successful that there are now competitors to their business in the “coupon bargain hunting” industry. LivingSocial has formed and is now a major competitor.

And despite all this success, I still feel that Groupon is only somewhat known. I first learned about Groupon last year and began asking people if they’d heard of it. Today, I asked my five college roommates if they’d heard of it. Only one of the five knew what it was.

The bottom line is everyone should know about Groupon because in the economy that we are still in people are always trying to find ways to save money.

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