
Lunch?
No such thing as a free lunch.
Groupon confirmed yesterday that it has already raised more than half of the $950m it is seeking in a monster equity funding round. The Chicago-based ecommerce coupon website, which recently shunned a $6bn takeover plan from Google, said in a US Securities and Exchange Commission filing on Thursday that it had cobbled together …
Anyone who buys into this will get burned in the end.
Ultimately the threshold for this business is very low and
can be easily undercut.
So, at a minimum, their profits are likely to drop like crazy.
In the end, there will still exist a niche for this, but it will have
to not be quite as greedy since repeat customers for groupon
are, to my understanding, quite low since they tend to cannibalize
their own business to temporarily get a surge of business.
The repeat customers at full price do not seem to surface and the
longer term customers learn of the discount and want in on the
deals, thus really hurting the bottom line.
There are some more detailed analysis's out there, but Google
really dodged a bullet. This would have been the biggest waste
purchase since the geocities fiasco years ago.