Groupon Executive Summary

With operations commencing in 2008, Groupon Incorporated has quickly become the largest online coupon organization world-wide, boasts the largest IPO offering for American internet-based companies since Google in 2004 and as of 2012 has captured over 50% of the market share. In 2012, the SEC examined the newly public company’s non-GAAP financials causing negative speculation among Wall Streeters and contributing to a loss in share value and investor faith. The public remains skeptical as to whether Groupon’s operations supported a sustainable business model despite its impressive initial growth.

Finding of Fact 1:

The face of advertising is changing. Traditional marketing is dying to a new breed of ads that meet consumer demand in real time.

In less than 2 years after its launch Groupon had grown to a net worth of over a billion dollars, serving 350 markets globally and swelling to 35 million users. Locations in the United States and Canada totaled 550,000 square feet and 30,000 for international markets.

Revenues at Groupon grew at an unprecedented rate between 2008 and 2011 and jumped from $5,000 in 2008 to over $1.6 billion in 2011. With the increase in revenues came an increase in reported net losses which jumped from just 1562k in 2008 to 245652k in 2011. Groupon noted that the diminished revenue growth can be attributed to increased processing fees for credit and debit purchases, unexpected number of refunds that were not recovered from merchants, and costs associated with

Groupon has done well to establish itself as a main provider for merchant to consumer discounts but will need to continue to embrace and invest in changing technology to ensure it is able to translate that advantage into solid returns for merchants both as single purchase points. As well as facilitating long-term relationships between merchants and subscribers.

Groupon will need to lead the pack in early adoption as technology continues to evolve and paths between marketers and consumers shorten. Diversifying offerings to merchants and subscribers will enable Groupon to remain useful and relevant in a climate of change but they will also have to continue to deliver on its initial mission to bridge the gap between e-commerce and brick and mortar merchants.

Groupon is in uncharted territory in a vertical who’s track record has not yet been established, making it hard to foresee if Groupon’s business model and growth is sustainable in the long run. The future of Groupon seems to hinge on both merchant and subscriber utility in an environment where technology is pitted against them to connect buyers and sellers in the digital and real world. Groupon must maintain elasticity in a sensitive market without losing sight of providing utility to consumers and merchants