1e06f00346f86f380e5b841e_dr538c.jpg

Greasing the Brave New Market's Skids

With the emergence of online sites like Groupon and its many clones, merchants are likely to face much stiffer competition and erosion of their brands. But, as the market becomes more efficient, that same trend is likely to affect Groupon itself.

NEW YORK – Internet firms are supposed to be all about the cutting edge, but reality and buzz sometimes conflict. Consider Groupon: its focus is the power of groups, but its actual business is the old standby of direct-mail marketing and coupons. But Groupon is spreading that model to a much wider audience – not so much to coupon users, but instead to merchants offering coupons. In fact, Groupon is doing for e-mail marketing what other Internet companies are doing for the Yellow Pages or classified ads: encouraging merchants to use modern technology to reach their customers.

The model clearly makes sense for a lot of customers: Groupon now has more than 50 million subscribers and aims for 150 million by year-end. Its revenues – about half the value of total transactions – were an estimated $760 million last year, and should hit $2 billion or more this year. Unlike most Internet companies, it has a lot of employees relative to its revenues – about 5,000.

Thousands of companies have used Groupon to sell their wares, though Groupon does not disclose its rate of repeat sellers.

We hope you're enjoying Project Syndicate.

To continue reading, subscribe now.

Subscribe

or

Register for FREE to access two premium articles per month.

Register

Support High-Quality Commentary

For more than 25 years, Project Syndicate has been guided by a simple credo: All people deserve access to a broad range of views by the world's foremost leaders and thinkers on the issues, events, and forces shaping their lives. At a time of unprecedented uncertainty, that mission is more important than ever – and we remain committed to fulfilling it.

But there is no doubt that we, like so many other media organizations nowadays, are under growing strain. If you are in a position to support us, please subscribe now.

As a subscriber, you will enjoy unlimited access to our On Point suite of long reads, book reviews, and insider interviews; Big Picture topical collections; Say More contributor interviews; Opinion Has It podcast features; The Year Ahead magazine, the full PS archive, and much more. You will also directly support our mission of delivering the highest-quality commentary on the world's most pressing issues to as wide an audience as possible.

By helping us to build a truly open world of ideas, every PS subscriber makes a real difference. Thank you.

Subscribe Now

https://prosyn.org/EJuklXc