Take the fastest growing e-commerce company in the world which sells services, and start using their 130 million strong mail list to also sell products. What do you get?
"Travel and Product are enormous opportunities. After only a few months, they’re already making up 20% of revenue in some countries. We sold $2M worth of mattresses in the UK — in one day!"
By extending into this market area, Groupon could very quickly invade the traditional territory of other online retailers who maintain a price sensitive customer base.
Scot Wingo has recently summarized his thoughts on the possibilities in his eBay Strategies blog:
"Groupon's identity and messaging which is: "save half off with us" is one that clearly appeals to the value consumer. The value consumer is 100% in both eBay and Walmart's wheel house, so I think they are most at risk from Groupon's metamorphosis from a local deal site to a full-on national marketplace."
"It's also interesting that eBay hasn't really caught on to this and is continuing to send eBay users over to Groupon through the eBay bucks program.
Amazon is somewhat insulated from this situation by a couple of factors:
- Amazon doesn't hang their hat on the value consumer. Sure they have some exposure, but primarily Amazon focuses on a combination of selection, value, convenience, ease of use.
- Amazon has a hedge in the form of their ownership of LivingSocial. This could be leveraged in a number of ways.
- Amazon could acquire the rest of LivingSocial and have a complete counter-offer to Groupon
- Amazon could keep LivingSocial separate, but perhaps have a counter to Groupon Products by leveraging Amazon's huge user base and access to products and merchants."
If you set aside any of the popular allergic reactions which have been built up against Groupon nowadays, it’s pretty clear that the claims are not too far-fetched. Groupon can use its email reach to turn over an impressive load of attractive product deals.
In the Groupon dominated buzz in recent days, the potential of live shopping in areas outside of services has been overshadowed. Amazon believes concretely in this potential as shown by their acquisition of Woot!, one of the foremost pioneers of this business concept. The singular difference between Groupon and Woot! in the product segment is that Groupon sells the deals but does not handle any of the warehousing or shipping logistics.
The question remains open as to how Groupon can fit all of the different market directions under their single email umbrella. A daily email with a long list of deals, each of which struggles for some reader attention is not something easily digestible.
Interestingly, there is not much talk about Groupon Stores, the self-service platform which could be a solution for this mid-term problem.
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Originally posted in German by Marcel Weiss, adapted for excitingcommerce.com by Jason Soo.