Saturday, December 4, 2010

Is Groupon really worth $6 billion, or more?

Groupon is a popular online coupon company. According to, it is the fastest growing company ever, beating the likes of and
It works on a simple concept - It extracts deep discounts of as much as 50% from major retailers in return for promising to deliver a minimum number of customers. It then engages Web surfers in a game of sorts, telling them they must get as many people as possible to respond by a deadline in order for everyone to get the discount. Groupon gets half the sales dollars, and the client gets to market its products, while paying very little money up front.

While that is good business, i really can't seem to understand how Google valued it at $6 billion, what's more the people at groupon think they are worth much more, and have reportedly rejected that offer and might plan to have an IPO next year. I personally haven't seen one really good deal at a place i would spend money anyways on groupon. They do have some coupons to SPA's or Outdoor activities etc, but i am not sure how many people would line up for those over an extended period of time.
They do not have any inherent technology, they seem to have a large database of consumer email id's and sales representatives going after local and national merchants,whats more there are a ton of similar sites like

It is also a so called social site, i don't see how it fits in the social networking world though. It will be very interesting to see how this groupon story pans out, it could be the next big thing (though i would not bet my money on that happening) or simply fizzle out. Only time will tell.

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