Groupon just succeeded in raising a mint of money -- $700 million -- with a limited IPO of 35 million shares last week. That values the company at around $12.8 billion, down from the heady heights of the $25+ billion range not so many months ago. But analysts are warning that the company may still be overpriced, given that there are essentially no barriers to entry for new competitors in the group discount arena.
Indeed, there may be as many as 600 competitors, according to a tally by MSNBC in August, although the high rate of turnover means many of these have already failed or been sucked up by larger competitors: a separate survey from Yipit.com found that 170 of 530 daily deal sites have already met their demise in 2011. The point is there are a lot of these sites running around, and new ones seem to pop up every day.
One of the bigger new launches is ShareItUp, from PeopleString Corporation, which unveiled a new coupon and deal platform that allows advertisers and marketers large and small to create and launch social coupons and deals on their Facebook business pages. In the ShareItUp iteration of the group discount model, social coupons go up in value the more they are shared -- thus rewarding Facebook fans, Twitter followers and email subscribers for sharing their offers.
ShareItUp also employs a cost-per-share pricing system for social commerce, wherein advertisers are only charged when their offers are socially engaged by a fan or their friends (or their friends’ friends, etc.). The social coupons feature security features to prevent online coupon fraud including the users name, watermarks and unique identification codes.
COMMENTARY: This does not surprise me at all, which is why I have never been very positive about Groupon's future prospects. Another problem for Groupon: They split the revenues from the sales of Groupons 50/50 with their merchants, but take 60 days to pay their merchants after the money has been collected. According to an article dated November 10, 2011 appearing in the Wall Street Journal, merchants are already starting to complain about Groupon's payment terms. This leaves an opening for competitors willing to take a smaller split of revenues and paying in a shorter time period.
Courtesy of an article dated November 9, 2011 appearing in MediaPost Publications The Social Graf
MacMaster, Go right ahead.
Posted by: Tommy | 11/21/2011 at 05:14 PM
Competition is always on. I think Groupon should also take a look on that matter. They need to realized the significance of "ALWAYS" winning the competition. If they won't, those new sites that just popped out today might take them down. They should learn on what had happened to Friendster. Thanks for sharing this wonderful post. Let me share this to my social bookmarking sites too. And by the way, you may also visit my website at http://www.macmassmailer.com/send-bulk-email-mac.
Posted by: Mac Mass Mailer Guy | 11/21/2011 at 05:09 PM