Ahead of IPO, Some Skeptical of Groupon's Value!
Since its inception, Groupon has steadily climbed the success ladder to achieve many accolades. It has shown immense promise and there is a definitive possibility of it being declared as one of the leading Tech IPOs of by the end of 2011. However, the company is not without its set of challenges. Some of these have also led to people wondering about Groupon's value and future ahead.
Here is a brief look at some of the reasons and speculations about Groupon's value:
Common Business Model
Groupon is based on online coupons distribution, which is a fairly imitable business model. In fact, in the three years that Groupon has established itself, there has been quite a rise in similar types of online businesses all over the internet. This definitely poses quite a risk to the company's value. However, the company has made progress in this direction opting for scale. This brings down the possibility of complete copy of the business model.
Insufficient Customer Profiling
One of the most insistent issues that customers have with Groupon offers is that the company keeps sending in random offer coupons that are not quite enticing or relevant to individual customers. This happens because Groupon does not really know its customers. Customer profiling is a necessary aspect so that correct offer coupon reach correct necessities. This will increase the chance of the offers actually being utilized, which will earn both the offer company and Groupon their value.
This is a catch 22 situation that most online businesses have to suffer. They have to rely on online customers for their business to thrive, yet their online customers are not a loyal follow group. More often than not, they are random visitors that just happen to come across some offer coupon that appeals to them. Instead of completely relying on this group of customers, Groupon should focus their energy on local customers that can lead to a loyal database of customers with the right kind of offer cultivation.
Expenditure Clash with Company's Earnings
Market reports have shown that the company has expanded quite rapidly. Most of this growth can be traced to the past 30-35 month's period. However, the reports also point out that the company expenditure has also grown in relation to the earning. The company's value will come down considerably if the reports do not start showing a higher profit margin in the coming months.
Extra Competition from the Biggies
The competition from Google and Facebook and the likes, on the similar concentration can be fatal to Groupon's value. Especially because, the bigger companies have a wealthier database and more efficient customer profiling that can get them better results.
Keeping all these conditions in mind, it is no wonder that speculation has arisen over the topic of Groupon's value in this over competitive and dynamic market. However, the company can cover lots of lost grounds if their sales and marketing costs even out and their profits get a break.