There have been a lot of announcements about Groupon lately and speculation about its future in light of its recent IPO filing. Let’s dive into the conversation. The main inspiration for this post comes from E.B. Boyd declaring Groupon will either go the route of Webvan or become the next Google (obviously not literally because Groupon is not a search engine)http://bit.ly/muZDWU. Webvan was apparently the first one to think of home delivery for groceries, with customers ordering groceries online to be delivered in a half hour window, which is similar to what many grocery stores now offer as a service that you can sign up for online. Wonder if Webvan patented that? Anyways, the model proved unsustainable and the company floundered. Then there’s Google, which originated the search engine concept and changed the industry forever. If Groupon were able to go that route, it would be because they added services that added something to and resonated with their bottom line. In other words, services that are an extension of the ones they already offer. This would be the most profitable outcome and would prevent them from going the way of Webvan. While I am not going to take sides, I do believe Groupon is sending out a mixed message. I believe this because of two recent articles I read, one about the founders funding on online pawn shop venture and another about its possible insertion into grocery store loyalty programs. One points them in the right direction and the other sends a mixed message. The one that sends a mixed message is undoubtedly the pawn shop venture. Granted this is through their investment group Lightbank, but it still reflects on them and they are still associated with it in some capacity. The company they are funding is called Pawngo http://bit.ly/kwY6C0. Basically, customers who need between $1,500 and $15,000 send in information about items they would like to pawn and receive an estimate within the hour. The items are shipped to Pawngo’s vault and the loans last 3-6 months. Eventually they may even extend the business to sell unclaimed items.
This venture sends a mixed message about Groupon because it does not relate back to who they are. The worst possible thing that Groupon can do is confuse its audience by not proclaiming a strong brand identity. If Groupon ventures into too many unrelated side projects it runs the risk of going that direction. Confusing its audience means that it will most likely lose users and merchants and lose touch with its origins, which are the daily deals that made them so well-known in the first place. However, if it stays smart and executes new extensions of this daily deal technology then the sky is the limit. E.B. Boyd discusses the opportunity for Groupon to carve an additional niche in driving sales during non peak hours by offering immediate deals that customers sign up to be notified of via their phone when they are in the vicinity. Surely this is one way they can capitalize on the foundation they have built. Another is the partnership with grocery store loyalty programs http://bit.ly/laS8g7. Recently Groupon has been testing this concept out with Big Y stores. An example of what they could offer can be found in their pilot seafood deal where customers could purchase a $39.99 seafood grill pack of lobster tails, clams, mussels, etc. for $24. This prepaid deal would be loaded into their account and reflected at checkout. Groupon could revitalize the coupon industry. It’s a natural extension of the deals they offer in partnership with other businesses and would be a great niche for them to acquire. That type of innovation is what is going to set them apart from any comparisons to Webvan. Groupon already sent a mixed message with their Superbowl commercial, lest we forget, and so the smart move would be to clearly spell out who they are from now on. That is how you build a company, by forming a strong brand identity and leveraging it with brand extensions that build on the bottom line. Groupon seems like a company who is willing to take risks, but they need to be smart ones. The next move, is up to Groupon.