Saturday, December 04, 2010

GroupOn Did The Right Thing

Image representing Zappos as depicted in Crunc...Image via CrunchBase
Groupon logo.Image via WikipediaSources: Groupon rejects Google's offer; will stay independent
Groupon Annual Revenues Actually $2 Billion

Secretly I was hoping this would not come to be. Google and GroupOn were not a good match. A great high tech company is not automatically a great high touch company. GroupOn does a lot of stuff offline. In that way GroupOn is not like YouTube at all. YouTube is all tech, all online.

This was not going to be a good buy for Google. And this would have severely limited GroupOn. GroupOn is just now getting started. This company could do really well independently.
Image representing KAYAK as depicted in CrunchBaseImage via CrunchBase
Amazon buying Zappos was similarly a bad idea. Zappos was IPO material. The white venture capitalists who forced Tony into Jeff Bezos' arms acted racist.

The web went mobile. The web will keep going mobile. The web will go offline. You could have seen this coming.

Currently I am helping out a friend with his tech startup as a tech consultant that has a clear offline component to it. You bring the tech to your service, and give great customer service and have a swell offline component to the business. Then you do well as opposed to if all you were was a website.

People like the idea of someone to talk to. Dell made the mistake of thinking inefficiency. Zappos says talk to the customer for as long as they will talk to you. Kayak is also a trailblazer in that regard. Everyone at Kayak does customer service. That is such a great idea, if you think about it. Of course great customer service makes business sense.
Enhanced by Zemanta

2 comments:

Anthony Miyazaki said...

Paramendra,

I agree with you that Groupon's type of hybrid approach to online/offline may have been difficult for Google to integrate into their online focus, which could have meant some problems with Groupon's growth. However, this would occur only if Google meddled too much with operations.

More importantly for the current Groupon investors is the viability of Groupon long-term. By setting up the concept to be only one coupon per location per day, they (1) encourage competition from other start-up group coupon firms, and (2) limit their growth.

Groupon's only chance is to start segmenting each geographic location so that multiple groupons are offered that target diverse consumer segments. Otherwise, growth is stagnant once geographic saturation is reached.

Anthony

http://e-marketingforsensiblefolk.blogspot.com

Paramendra Bhagat said...

Anthony,

I had imagined a scenario where GroupOn did get acquired by Google and Google did do a good job of integrating GroupOn. Please see my eaerlier posts linked to from the bottom of this post.

And although at one point I did call GroupOn a one trick pony, that was more rhetorical. I think GroupOn has the potential to become one of the next big things. The fastest growing company ever is no sitting duck.

If Google had left GroupOn alone like Amazon had left Zappos alone, that would have been the best kind of integration. But if that be the case, there is more money for the GroupOn founders to go IPO next year rather than sell to Google this year.

I think you have offered some good ideas as to what directions GroupOn might grow into next.

Off to check out your blog to add to my blogroll.