Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000) • Hacker News Board

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#81

Post by gallamine » Sat, Jun 04, 2011, 3:02 PM UTC

jamiequint wrote: post #18

melvinram wrote: post #15

Earlier 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.

Exactly this. I'd be very interested in a stat of how many of Groupon's merchants are operating these deals at a profit. I know one SF merchant personally that does, but I suspect its very few. Even more importantly, I'd be interested in how many of these Groupon customers are returning to the merchant. If that number is high than Groupon has hope, if its low then they aren't actually adding much value and they can o…

I'm an investor at the TechShop in the Raleigh-Durham area. We ran two Groupon deals over the past 9 months. Both had very good results (~280 sales each, at $120/Groupon. Groupon took ~20%). We were VERY careful to structure our deal such that we would make a profit on each deal - membership is fairly cheap per customer. Our main cost is instructor time for classes, and we have a minimum number of people/class. Furthermore, the business is such that getting a potential customer to visit the TechShop is very valuable (the TechShop has a certain wow factor), so we were counting on the discount given via Groupon as the cost of getting someone to visit and try the shop.

So far, the results have been mixed, with about 20% of the Groupon users signing up for additional months of shop access. That's better than the other steep discounted deals we've offered.

So, for a business like TechShop, Groupon works really well. We'll be working with them again.

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#82

Post by rockarage » Sat, Jun 04, 2011, 3:50 PM UTC

Back in 2000, Amazon did not face the same type of competition Groupon faces today. There was no Facebook or Living Social, Google did not have 30 billion in the bank. Groupon is now competing against Facebook, Google and Amazon(Living Social). If you're merchant, you have more options to choose from and less reasons to go with Groupon.

1.)Merchants can be certain that Amazon and Google will have the money to pay them. Groupon on the other hand does not have any profits and is burning through all their revenue to grow.

2.)Google, Facebook and Amazon has a larger user base.

3.)Merchants can get a better deal from Groupon's competitors as they try to lure/woo them from Groupon.

Groupon is on very shaky ground the other players are not. The fact is, in 2000 Amazon did not have a number of very profitable businesses copying them. Amazon could grow, figuratively build a moat without being attacked, Groupon has no such luxury.

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#83

Post by Goladus » Sat, Jun 04, 2011, 7:12 PM UTC

space-monkey wrote: post #56

melvinram wrote: post #32

Earlier quoted context omitted.

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.

"That's just semantics." Exactly. The semantics is what the words actually mean .

"That's just semantics" is a common way of saying "you're arguing over semantics instead of the point." When arguing semantics is disguised as a genuine rebuttal, it's a fallacy.

If I say the sky is blue, and you assert the sky has no color, you're not actually contradicting my assertion you're disagreeing about the meaning of the word 'sky'. That's arguing semantics instead of addressing the point.

Re: Amazon: Ponzi Scheme or Wal-Mart of the Web? (2000)

#84

Post by melvinram » Sat, Jun 04, 2011, 7:25 PM UTC

Goladus wrote: post #83

space-monkey wrote: post #56

Earlier quoted context omitted.

"That's just semantics." Exactly. The semantics is what the words actually mean .

"That's just semantics" is a common way of saying "you're arguing over semantics instead of the point." When arguing semantics is disguised as a genuine rebuttal, it's a fallacy. If I say the sky is blue, and you assert the sky has no color, you're not actually contradicting my assertion you're disagreeing about the meaning of the word 'sky'. That's arguing semantics instead of addressing the point.

Yes, by "that's just semantics", I meant that it doesn't matter which party you call the customer. The thrust of the argument is still that Groupon is screwing over merchants and that I'm not convinced that merchants will continue to work with Groupon.