What goes on in the minds of Groupon management these days? Remember they turned down $6B dollar offer from Google in December, 2010. I thought it was a dumb decision by Groupon to turn down that offer from a giant internet company. They could’ve done much better with the muscle power of Google and built a strong barriers to entry for competition. It seems competition is mounting pressure everyday and the eventual successful IPO might be in jeopardy.
Today every company that has a website with reasonable traffic seems to have a desire to tap in to this “Local Deals” market and consumers are tired of it.
Local businesses are already feeling the negative effect of advertising with Groupon.
Imagine the reaction of your regular customer when they learn the discounted price somebody paid for the expensive dinner they just had.
Think about another issue, when a coupon expires Groupon shows your competitors deals “similar” offer. How would you feel about that?
What was Groupon’s strength again? Network effect? ( they had most number of local businesses posting deals with them?). How difficult it is for competition to reach out to these local businesses?
At&T has announced that it is going to launch Groupon Competitor. It makes sense, it already has a relationship with local businesses through its Yellow Page Service.
Expect announcement shortly from other Yellow Page companies. There are no barriers to entry in to this market for the entrenched players. So why wait?
