Maybe I'm just out of the loop these days or I need to get into Manhattan more, but I can recall seeing actual Amazon ads in places like bus shelters and subway platforms and also hearing radio ads back in 2000. All I've heard of Groupon is from the Internet. Have I missed any big ad campaigns they've done or has their growth all been Net-based word-of-mouth?
Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
31–40 of 84 posts
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#32Earlier quoted context omitted.
I think the piece of the puzzle that most people have trouble with is not that they'll have repeat customers. It's that those customers are loyal to Groupon... or more specifically, loyal to the concept of deep discounts. The part most people, including myself, have a hard time grok'ing is that merchants will continue to punish themselves by doing business with Groupon.
I think that perhaps you're not grokking Groupon, the customers of Groupon have never been the bargain hunters, they've always been the merchants. The bargain hunters are the product Groupon sells. You can then look at the model and realize Groupon have been screwing their own customers. It's a shame as I think the core concept of the business is pretty sound in my book, but I was astounded when I found out the Group…
That's just semantics. There are three parties involved: Groupon, end customers and merchants. It was pretty clear who marciovm123 and I were referring as the customers in the posts.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#33Earlier quoted context omitted.
This is a big moment that could potentially affect a lot of people. Some HNers may be considering investing- discussion of this opportunity will probably help with this decision making. Further there are many parties incented to pump hot stocks so they can profit from the fees and possibly from pump-and-dump: investment banks, current investors, soon-to-be investors, etc. I enjoy hearing both sides of the discussion…
The discussion is great, don't get me wrong. Company IPOs, people buy or don't buy for tons of reasons, the company executes on their plan, and the market adjusts. Trying to label a company a ponzi scheme seems like little more than sensationalism to me. That said, I would never invest in Groupon, simply because I don't use the product ever.
That said, I would never invest in Groupon,
simply because I don't use the product ever.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#34Maybe I'm just out of the loop these days or I need to get into Manhattan more, but I can recall seeing actual Amazon ads in places like bus shelters and subway platforms and also hearing radio ads back in 2000. All I've heard of Groupon is from the Internet. Have I missed any big ad campaigns they've done or has their growth all been Net-based word-of-mouth?
I don't know of any, but on the other side of the coin lets consider that the net penetration 11 years later is much higher, and maybe the ROI of print advertising for their demographic is not as high.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#35The difference is... Groupon can never scale well and have great profitability-- they need 8000 employees to do what? They have a list of merchants and a database of emails and what else? As pointed out on another HN thread, Amazon built a moat what has Groupon done?
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#36Earlier quoted context omitted.
I think that perhaps you're not grokking Groupon, the customers of Groupon have never been the bargain hunters, they've always been the merchants. The bargain hunters are the product Groupon sells. You can then look at the model and realize Groupon have been screwing their own customers. It's a shame as I think the core concept of the business is pretty sound in my book, but I was astounded when I found out the Group…
That's just semantics. There are three parties involved: Groupon, end customers and merchants. It was pretty clear who marciovm123 and I were referring as the customers in the posts.
It was in no way semantics, and his point was actually very insightful.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#37I 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 oper…
The fundamentals of Amazon's business are much better than Groupon's though. Its still unclear whether or not Groupon is sustainable for merchants. There are two questions that merchants should be asking when they are trying to decide whether or not to run a Groupon: 1. "Will I make money on this offer even after the discount and after Groupon takes their cut?" The answer here is NO for a large majority of merchants,…
Groupon can always lower their cut in the future though once they have built out their database of customers. It also wouldn't surprise me if they laid off half their workforce once their rate of customer acquisition starts leveling off.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#38Maybe I'm just out of the loop these days or I need to get into Manhattan more, but I can recall seeing actual Amazon ads in places like bus shelters and subway platforms and also hearing radio ads back in 2000. All I've heard of Groupon is from the Internet. Have I missed any big ad campaigns they've done or has their growth all been Net-based word-of-mouth?
They did a Super Bowl ad (at obviously significant expense): http://www.groupon.com/blog/cities/groupon-super-bowl-ads/
Wasn't regarded as a big success though: http://allthingsd.com/20110207/groupon-back-peddles-after-vi...
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#39"...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.
I seriously question the loyalty of new Groupon customers. Typically they sign up because of one deal. They might even buy the deal. Then Groupon proceeds to spam them every day with deals they aren't remotely interested in, at locations far from their home. Unsubscribe.
Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)
#40Earlier quoted context omitted.
The fundamentals of Amazon's business are much better than Groupon's though. Its still unclear whether or not Groupon is sustainable for merchants. There are two questions that merchants should be asking when they are trying to decide whether or not to run a Groupon: 1. "Will I make money on this offer even after the discount and after Groupon takes their cut?" The answer here is NO for a large majority of merchants,…
Groupon can always lower their cut in the future though once they have built out their database of customers. It also wouldn't surprise me if they laid off half their workforce once their rate of customer acquisition starts leveling off.
To do that, wouldn't they have to admit that they aren't growing like nuts anymore, and wouldn't that kill their valuation? (Even established companies like Apple and Google base most of their valuations on the premise of future growth. When the premise of future growth goes away, you have Microsoft.)