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Groupon updates IPO filing, admits it's unprofitable

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Re: Groupon updates IPO filing, admits it's unprofitable

#71

Post by namityadav »

jonnathanson wrote: post #66
r00fus wrote: post #29

Earlier quoted context omitted.

A land grab only makes sense if you have constructed or inherited barriers to entry... what are their barriers? They're grabbing land that will be stolen the next day from them by LivingSocial or Google Offers...

Exactly. Amazon's acquired land was defensible, so to speak. Once it acquired a customer, that customer was likely to stick around. As the numbers show, Groupon can only get 20% of all first time users to buy something. And yet, it counts all prospects as "customers." And even for those who do buy a groupon or two, what reason would they have to stay loyal to Groupon? At best, Groupon is poised to become one of many…

Amazon's acquired land was defensible, so to speak. Once it acquired a customer, that customer was likely to stick around

Why?

Re: Groupon updates IPO filing, admits it's unprofitable

#72

Post by damoncali »

maukdaddy wrote: post #69
WarDekar wrote: post #50

Earlier quoted context omitted.

Not only is their accounting on customer acquisition bogus, but how do they possibly value these customers? FTA: Groupon's subscriber count -- the one Mason says it is spending aggressively to beef up -- now stands at 116 million, up from 83 million at the end of last quarter. Among those subscribers, 23 million have purchased a Groupon at least once. So they have 116 million "customers," but less than 1 in 5 of thos…

Exactly! Subscriber != customer. These are the exact kinds of statistics and statements that companies made in the first tech bubbble.

To be fair, Groupon calls them "Subscribers" and "Customers", defining both, in the report. It's not terribly misleading.

Re: Groupon updates IPO filing, admits it's unprofitable

#73

Post by khuey »

jonnathanson wrote: post #66
r00fus wrote: post #29

Earlier quoted context omitted.

A land grab only makes sense if you have constructed or inherited barriers to entry... what are their barriers? They're grabbing land that will be stolen the next day from them by LivingSocial or Google Offers...

Exactly. Amazon's acquired land was defensible, so to speak. Once it acquired a customer, that customer was likely to stick around. As the numbers show, Groupon can only get 20% of all first time users to buy something. And yet, it counts all prospects as "customers." And even for those who do buy a groupon or two, what reason would they have to stay loyal to Groupon? At best, Groupon is poised to become one of many…

Amazon is already sending out "deals" emails from LivingSocial.

Re: Groupon updates IPO filing, admits it's unprofitable

#74

Post by robryan »

namityadav wrote: post #71
jonnathanson wrote: post #66

Earlier quoted context omitted.

Exactly. Amazon's acquired land was defensible, so to speak. Once it acquired a customer, that customer was likely to stick around. As the numbers show, Groupon can only get 20% of all first time users to buy something. And yet, it counts all prospects as "customers." And even for those who do buy a groupon or two, what reason would they have to stay loyal to Groupon? At best, Groupon is poised to become one of many…

Amazon's acquired land was defensible, so to speak. Once it acquired a customer, that customer was likely to stick around Why?

Because they built up a heap of infrastructure required to consistently offer some of the best prices for goods online. Competitors could only really compete in niches because the startup costs to get to amazons scale would be massive.

With group deals, all someone has to do is setup a basic website and start calling up companies to find better deals than Groupon is offering, the customer doesn't care which deals site is offering a deal as you can signup to a new one in about 5 minutes.

With the deals site I've found aggregators to be more useful than the individual sites as the one which has the deal doesn't matter much. If I was looking for a book I wouldn't worry about an aggregator but head straight to Amazon or Book Depository which is also now Amazon owned.

Re: Groupon updates IPO filing, admits it's unprofitable

#76

Post by potatolicious »

namityadav wrote: post #71
jonnathanson wrote: post #66

Earlier quoted context omitted.

Exactly. Amazon's acquired land was defensible, so to speak. Once it acquired a customer, that customer was likely to stick around. As the numbers show, Groupon can only get 20% of all first time users to buy something. And yet, it counts all prospects as "customers." And even for those who do buy a groupon or two, what reason would they have to stay loyal to Groupon? At best, Groupon is poised to become one of many…

Amazon's acquired land was defensible, so to speak. Once it acquired a customer, that customer was likely to stick around Why?

Former Amazon employee, my comments do not necessarily reflects the views of my (former) employer, yadi yada.

Amazon's fulfillment infrastructure is the best in the world, bar none, full stop. It is so far ahead of every other online retailer that it's pretty sobering to think about.

Amazon can get items to you faster, more reliably, more cheaply than just about anyone else, by a pretty ridiculously wide margin. There is a tremendous amount of extremely non-trivial know-how within Amazon that permits them to operate like this. Even if you had access to all the money in the world you'd still have a hard time cloning Amazon's infrastructure... and at this stage, even if you had the know-how, the amount of money required is not within the realm of a startup's reach.

Compared with Groupon, whose uniqueness is entirely public knowledge, who have no capital infrastructure that is hard to clone. Who have no trade-secret business processes that give them a leg up over the competition. You can do exactly what Groupon does with a trivial amount of cash and know-how (and people do, see the ridiculous number of Groupon clones).

Amazon's acquired land is defensible, Groupon's is... really not.

Re: Groupon updates IPO filing, admits it's unprofitable

#77

Post by rysulliv »

samstave wrote: post #45
cletus wrote: post #37

Groupon is a fundamentally bad business and I wouldn't touch it with a 10 foot cattle prod. Some say that we know they're not profitable but that's really not the point. By counting customer acquisition as an extraordinary expense they are implying that: 1. The value of that customer is AT LEAST as much the cost of acquisition; and 2. That cost also accounts for the natural loss of customers. This is shady because (I…

There are many of us who have always known groupon was a bad idea. My information comes from all my friends in SF who own businesses that Groupon attempted to solicit. My friends cupcake shop in union square was asked to sell their cupcakes for 25% of retail and at a loss in a very pushy way by groupon. I have been on groupon for pretty much since they launched. I have bought in total (1) groupon. And I forgot about…

I completely agree, I have been a "subscriber" for months and I am borderline considering it just another piece of spam. But the real point here is how bad it is for so many businesses. I am not saying it is not great for some as well, I just have heard too many stories of groupon trying to hard sell small companies that don't fully realize the impact these "deals" can have. That is just a business model that scares me!

Re: Groupon updates IPO filing, admits it's unprofitable

#78

Post by OpenAmazing »

WarDekar wrote: post #50
cletus wrote: post #37

Groupon is a fundamentally bad business and I wouldn't touch it with a 10 foot cattle prod. Some say that we know they're not profitable but that's really not the point. By counting customer acquisition as an extraordinary expense they are implying that: 1. The value of that customer is AT LEAST as much the cost of acquisition; and 2. That cost also accounts for the natural loss of customers. This is shady because (I…

Not only is their accounting on customer acquisition bogus, but how do they possibly value these customers? FTA: Groupon's subscriber count -- the one Mason says it is spending aggressively to beef up -- now stands at 116 million, up from 83 million at the end of last quarter. Among those subscribers, 23 million have purchased a Groupon at least once. So they have 116 million "customers," but less than 1 in 5 of thos…

No. The email subscribers are Groupon's customers - if you define "customer" as "where the money comes from".

Every day Groupon sends out a daily deal to their email subscribers. Some percent of those subscribers opt to purchase the deal and go to Groupon's website and pay with a credit card. That's where the money comes from. Groupon then distributes some of that money at a later date to the merchant offering the deal.

So their success is very much dependent on the size of their email list, because that is the maximum number of potential customers (payers). Zero subscribers means zero money. If all the merchants dropped out that subscriber list could still make money via affiliate or other partner revenue.

Re: Groupon updates IPO filing, admits it's unprofitable

#79

Post by samirg »

jayzee wrote: post #49
puredemo wrote: post #5

Groupon not selling to Google was the dumbest thing I've ever seen a company do. Ever.

It was actually smart. Groupon wanted a hefty break-up $5B fee. Google refused. Groupon must have known that the deal would never pass muster at Google after real number crunching. Hence they refused. With the break-up fee they would have still made like bandits.

The break up fee was to protect against the gov't blocking the acquisition due to antitrust concerns as far as I know. Pretty sure the business diligence was already complete by that time.

Re: Groupon updates IPO filing, admits it's unprofitable

#80

Post by [deleted] »

potatolicious wrote: post #76
namityadav wrote: post #71

Earlier quoted context omitted.

Amazon's acquired land was defensible, so to speak. Once it acquired a customer, that customer was likely to stick around Why?

Former Amazon employee, my comments do not necessarily reflects the views of my (former) employer, yadi yada. Amazon's fulfillment infrastructure is the best in the world, bar none, full stop. It is so far ahead of every other online retailer that it's pretty sobering to think about. Amazon can get items to you faster, more reliably, more cheaply than just about anyone else, by a pretty ridiculously wide margin. Ther…

[deleted]
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