Groupon

I want to write a bit about Groupon. Why, you ask? It was founded in Chicago, the city I now call home; it’s fantastically genius and brilliant; I’ve heard nothing but great things about it; and I am a happy consumer of Groupons. Those are four compelling reasons to further educate those who haven’t heard of Groupon.

So what is Groupon? Groupon is a web-based, subscription-based coupon service. The coupons are for shows, sporting events, restaurants, spas, and touristy things. The Groupon are offered at extremely attractive prices. You simply enter your city and e-mail address and every morning a Groupon arrives in your inbox.

Now since I majored in economics in college, I always focus on the driving pressures behind everything we do: Incentives. What are the incentives for consumers, for companies, and for Groupon?

Consumers. It’s the things you already love to do, and the things you will learn to love to do, at better prices than you’d ever find anywhere else. Skydiving for $120; $50 at Gap for only $20 (their most successful Groupon to date); Driving range balls at half off; restaurant deals at 40-60% off, and the list goes on and on. The website is simple and easy to use. You don’t get hit with fees. There are no upfront costs. The coupons usually don’t expire for a while. Win. Win. Win.

Companies. The exposure is invaluable. I imagine Groupon uses its subscription numbers front and center in their pitch to companies. The amount of people viewing the coupon for your product is large. You get immediate cash flow on the front end. You get the potential of repeat customers. The liabilities are not great since not everyone will redeem their Groupon. And I bet the companies are still making some sort of profit, even at the discounted prices.

Groupon. The costs are quite low on Groupon’s end. They never actually provide a product or a service. The publicity they are currently getting only fuels future business opportunities. They get to make people very happy. Don’t we all want to work somewhere where we believe in the product and get excited to sell it?

I’m a Groupon fan. I admire the entrepreneurship and vision it took to get the company off the ground. I’m proud to have the same home as Groupon. I already am and will continue to be a happy consumer of Groupons.