Groupon Case Analysis Essay

968 Words4 Pages
. In today’s boom or bust economy and the fast growing technology, the rapid growth of the online market is no surprise. Groupon, like sites such as Expedia and Priceline, is an “e-tailer” (Growing Pains at Groupon) in which the site acts as the “middleman” who is responsible solely on transaction of goods and services between the customer and the supplier, or referred as “merchant.” Groupon’s business model is quite simple. The merchants, goods suppliers or services providers, agree to give Groupon’s customers, the subscribers, a discounted price for their goods and services if Groupon attracts enough subscribers to be qualified for the discount deal. This business model takes the full advantage of unit of scales, which means it…show more content…
Nevertheless, it allows Wal-Mart to provide one-on-one interaction with its customer. On the other hand, born and developed in the online, Groupon does not carry physical inventory. There is a lack of control or even knowledge over the quality of goods and services that the merchants provide, which is potentially a setback on creating customer’s trust. Undeniably, Groupon is very promising company, marked as “the fastest growing company—ever” comparing to Wal-Mart, one of the world’s largest retailers. However, Groupon’s success was only temporary. According to Groupon’s lists of risk factors in the Management Discussion and Analysis section of their 10-K, Groupon seems unsure to where they stand economically and financially (SEC, Groupon 10-K). Unlike a brick-and-mortar company, Groupon carries a very little to none physical inventory. Nevertheless, being an online commerce in this fast growing technology world, Groupon has the power to become one of the biggest player in the U.S and global. However, their lack of proper internal operations and controls has enforced a sufficient amount of risks to the company. Groupon is not able to neither uphold their revenue hyper growth nor sustain their organization impact on the market. The company is meeting limitations and incurring many infamous attentions from the Securities and Exchange Commission. Knowing that Groupon does business in excessive industries, which some
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