Remember that kid who always mimicked everything you did, back in grade school? It sucked. And what did your mom say when you complained about this leech?
Odds are it was something like “copying someone is the highest form of flattery.” That probably got your mom a massive, accomplished eye-roll.
But what happens when you’re dealing with the same situation as an adult…and this time, the copying hurts more than your sense of individual badassery? Ask Groupon.
Why Did the Deal Fall Through?
It has been over a month now since the favorably-anticipated Groupon buyout by Google deal fell through. We’ve seen a lot of speculation as to why this happened, but we here at SEO Steve are curious about something else: with all the copycats cropping up, and the overall trend moving faster and faster in the direction of Local, how is Groupon going to stay competitive? Is the hubris (if it was, in fact, a factor in the breakdown in the deal with Google) of the company going to seal its fate?
You don’t need us to tell you about Groupon’s meteoric rise in popularity, market share and profitability. Those numbers are everywhere. But with all the fame of being such a star company comes the exposure to knock-offs. There are too many to mention, but some of the bigger ones are DailyDeals, BuyWithMe, LivingSocial. Even Yelp has joined the action. It’s so easy now to take advantage of the “group purchasing power” model, and as social media takes over more and more of the average person’s internet usage, this model isn’t going away.
Now, I’ve seen arguments that Groupon will always be king of this market share (it currently holds 70%, even with all the competitors that have cropped up) because they have very recognizable branding, still highly competitive deals, and are perceived as a “great company.” But are they good enough to stay on top? And why not merge with Google?
Some speculate that Groupon feels their value can only increase right now, and that a deal with Google was premature. But Business Insider had an interesting article on the subject: “This [Groupon] source says the view on Groupon’s board was that a Google-Groupon merger would draw more regulatory scrutiny that any other deal Google has ever done […] Because of this view – that Google-Groupon might not be allowed to go through and that it would take months and months to find out the bad news – board members decided they would need a significant break-up fee if they were to accept Google’s offer.”
Clearly, the proposed fee was not to Google’s liking.
Which brings us up to date, with Groupon still going strong despite all the local whippersnappers popping up around it. And they’re highly competitive, too. All of the previously mentioned sites average between 50-90% savings on deals, offer deals in the same categories, and incentives for you to invite your friends to purchase deals.
And let’s not forget that everything is moving fast to local, and Google is working hard to get a piece of that pie.
So that’s where we stand. Can Groupon handle all of the competition with its brand alone? It’s only going to get more crowded in the pond; in September, a WordPress plugin for daily deals became available (insert link: http://groupbuyingsite.com/wordpress-group-buying-plugin-daily-deals-theme/)
What do you think? Did Groupon make a fatal mistake, or was it a stroke of genius?