Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
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Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#2The big difference is Amazon has always sold tangible goods to actual consumers.
Even though they operated at a loss while taking investment, they weren't using the investment to pay out older investors. They had a solid plan for generating profit, which Groupon doesn't seem to have.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#3"...when you consider that better than 60 percent of Amazon's sales come from repeat customers--which implies that they're loyal..."
That seems to be the key figure missing from the Groupon discussion. If they are buying loyal users and customers, their mad-dash growth strategy would seem rational. If their retention is poor, it would seem more like a Ponzi scheme.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#4The big difference is Amazon has always sold tangible goods to actual consumers. Even though they operated at a loss while taking investment, they weren't using the investment to pay out older investors. They had a solid plan for generating profit, which Groupon doesn't seem to have.
Well... Groupon has always sold tangible goods and services to actual customers, too. Customers that are every bit as fickle as the ones Amazon had to win over a decade ago. They may succeed or fail at this, but it's not like they're still looking for a business model.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#5[deleted]
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#6Does Groupon have a durable competitive advantage? Does it have a moat?
I'm not sure.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#7The big difference is Amazon has always sold tangible goods to actual consumers. Even though they operated at a loss while taking investment, they weren't using the investment to pay out older investors. They had a solid plan for generating profit, which Groupon doesn't seem to have.
Well... Groupon has always sold tangible goods and services to actual customers, too. Customers that are every bit as fickle as the ones Amazon had to win over a decade ago. They may succeed or fail at this, but it's not like they're still looking for a business model.
The people who get the coupons are not the real customers in Groupons case, but rather the local shop owners.
Supposedly, they've been having a good deal of trouble getting repeat customers, they need to find new shopkeepers each round to make up for the last time. Hence why people are calling it a Ponzi scheme.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#8I actually though about Amazon when I saw people starting to rag on Groupon and its bottom line.
Another important thing to remember is that Amazon actually figured out its business model later. For a while, it was pretty much just a dot-com that was hemorrhaging cash. I remember reading articles for years predicting that Amazon would go belly up any day. It wasn't until they cut costs and really dialed in their operations that they became a "real" business, and this didn't happen until years after they went public. Although I guess that they did always focus on making customers happy - they just eventually figured out how to do that without going bust.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#9The big difference is Amazon has always sold tangible goods to actual consumers. Even though they operated at a loss while taking investment, they weren't using the investment to pay out older investors. They had a solid plan for generating profit, which Groupon doesn't seem to have.
Well... Groupon has always sold tangible goods and services to actual customers, too. Customers that are every bit as fickle as the ones Amazon had to win over a decade ago. They may succeed or fail at this, but it's not like they're still looking for a business model.
Not a business model, a strategy to generate profit from their current model. Groupon's current strategy is to take a customer base that doesn't generate profit, and make it larger. Yet they haven't shown any way that scaling will reduce costs much.
How does capturing more merchants drive their costs down, when they have to pay significantly more for each one?
Amazon had the answer of vertically integrating as much of the supply, warehousing, and shipment to drive costs down. Groupon doesn't have any way of driving costs down. That's the problem in my mind.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#10Earlier quoted context omitted.
Well... Groupon has always sold tangible goods and services to actual customers, too. Customers that are every bit as fickle as the ones Amazon had to win over a decade ago. They may succeed or fail at this, but it's not like they're still looking for a business model.
Not a business model, a strategy to generate profit from their current model. Groupon's current strategy is to take a customer base that doesn't generate profit, and make it larger. Yet they haven't shown any way that scaling will reduce costs much. How does capturing more merchants drive their costs down, when they have to pay significantly more for each one? Amazon had the answer of vertically integrating as much o…
The founders have already found a business model that has generated them in excess of $500M. Thus Groupon for them has already been successful.