What is Groupon and Why It’s a ‘Big Deal’

Technology
What is Groupon and Why It’s a ‘Big Deal’ PHOTOGRAPH: Groupon/Facebook |

Tiffany Haddish had just been chosen as the spokesperson for Groupon ads, including the company’s upcoming Super Bowl commercial. She was chosen after she revealed that she brought Jada Pinkett Smith and Hollywood royalty Will Smith on a swamp boat tour using her Groupon. Her story went viral, garnering three million views on YouTube, for the hilarity that ensued. Jada, as it turned out does not have any idea what Groupon is. Tiffany, on the other hand, was shocked to know that someone had no clue whatsoever of how deals gotten from Groupon are “big deals.” Will Smith ended up touring the swamp with a whole bunch of “regular” people and cherished the day nonetheless.

Watch the hilarious video here.

So… What exactly is Groupon?

Groupon is an e-commerce site founded in 2008. Its business platform is simple: it recommends discounted deals for a day from different restaurants and stores. Discounts could go from 40 percent to 60 percent off. These deals, however, would only last for a day so those who want to avail need to purchase the coupons the moment they see them or otherwise lose the bargain.

Signing up is free both for users and business owners. Groupon earns a commission for each of the successful customer that purchased a deal from its platform.

How big is Groupon?

Unless you are Jada Pinkett, you know by now that Groupon amassed millions of users for the deals it offers. The platform has 43.8 million active customers to date. These shoppers had saved more than $20 billion in North America alone. Groupon is active in 15 countries and more than 500 markets around the world.

Groupon is headquartered in Chicago, Illinois and currently employs more than 7,000 people worldwide. The company sold its one billionth coupon in 2017.

Google tried to acquire Groupon for $6 billion in 2010 but the latter rejected the offer. In 2011, Groupon was already valued at $25 billion. Its market capitalization to date is more or less $3 billion. It is valued by IPO at approximately $13 billion at $20 per share in 2011. The company reported 18 billion worth of revenue growth in 2017.

How exactly does Groupon work?

Anyone can sign up in the platform. Groupon would then send an email everyday announcing its deals of the day. If a subscriber see a deal that he or she likes, he or she purchases that electronic coupon with either credit card or Paypal. This electronic coupon is printed and brought to the store to redeem the discounted deal of the day.

How does Groupon manage to create the “mania” for its deals?

As mentioned above, the discounted coupons are only valid for 24 hours. While users can redeem the offer from the participating stores for the next six up to 12 months, the discounted deals being emailed by Groupon are only valid within a 24-hour period. Hence, users are fond of sharing these offers to friends and families whom they know will be interested. They also share recommendation links across social media. Since discounts are valid in a very limited time, users grab them right there and then or they would want people close to them to take advantage of them and so they share away. Groupon has always had the potential to become viral because of this.

Here’s an infographic from 16Best.net to know more about Groupon: