Groupon was created in 2008 with a business model of offering daily deals with high discounts for a limited time. By the end of 2009, Groupon had expanded to 28 US cities. Today, Groupon operates in 48 countries and over 500 markets. In 2013, Groupon had $5.8 billion in gross billings and $2.6 billion in revenue, with a market share of 59.1% in the daily deals industry. However, Groupon faces intense competition and high threats of substitution and new entry into the market. It needs to continue innovating and providing the best deals to remain a leader.

1. BERTILLE LION | CAREY BARGERON | RHYAUNA GUIDRY
MGMT 6580 |DR. FRITZ

2. INTRODUCTION
 2007 – creation of “The Point” by Andrew Mason
 2008 – creation of Groupon (group + coupon)
 Business model - one deal per day, high discount, limited amount of time to buy the
deal and limited numbers of deals offered
 1st Groupon - deal for Motel Bar, located just downstairs from the Groupon office in
Chicago, Illinois
 End of 2009 – Groupon had spread to 28 U.S cities
 Today – Groupon has expanded to 48 countries and over 500 markets

3. INTRODUCTION

4. MISSION | CULTURE
 Mission: “to become the world's commerce operating system. By
connecting buyers and sellers through price and discovery, we have the
opportunity to become one of the world's essential companies, a daily
habit for our customers and merchant partners.”
 Culture – creativity, trust, empowerment, transparency, dedication to
customers & mindset of a startup
“We assume that people are fundamentally good and people are
responsible adults” – Andrew Mason
Examples: Open vacation policy, financial goals

5. WHAT MAKES GROUPON AWESOME?

6. CURRENT COMPANY PERFORMANCE
 Fiscal year 2013:
Gross billings - $5.8 billion
Revenue - $2.6 billion
Operating income (excluding stock compensation & acquisition costs)
- $197.2 million for the full year
Gross profit margin – 58.34%
Operating profit margin – 2.94%
ROE – (-) 4.68%
Free cash flow - $153 million (5.96%

7. CURRENT COMPANY PERFORMANCE
 Groupon is doing well in the daily deals market in terms of its market share and
potential growth
 2013 – 59.1% market share
GROUPON, INC.
59.1%
OTHER
24.3%
LIVINGSOCIAL
16.6%

8. HISTORIC COMPANY PERFORMANCE

9. MAIN OPERATING METRICS
 Subscribers - total number of individuals that have completed registration through a
specific date, less individuals who have unsubscribed
 in 2011, Groupon had 83.1 million subscribers.
 Cumulative customers - total number of unique customers that have purchased
Groupons since 2009
 in 2011, it had 15.8 million customers
 Featured merchants - total number of merchants featured in a given time period
 In 2011, the pool was up to 40,000 merchants
 Groupons sold - total number of Groupons sold in a given time period
 In 2011, Groupon sold over 60 million Groupons total.

10. CORPORATE GOVERNANCE
Groupon Senior Management Team 2013
 Chief Executive Officer & co-founder of the company
 Eric Lefkofsky
 Chief Financial Officer (since December 2010)
 Jason Child
 Senior Vice President , Product management (leaving in March)
 Jeff Holden
 Chief Operating Officer (since May 2012)
 Kal Raman
 General Counsel (since 2011)
 David Schellhase
 Senior Vice President, Engineering and Operations (since April 2013)
 Sri Viswanath
 Senior Vice President, Global Marketing (since June 2011)
 Rich Williams

11. CORPORATE GOVERNANCE
STRATEGIC ISSUES
Lack of management skills
 Employees grow up to 10,000
 Disconnect between top management & employees
Groupon went public – November 2011
 Issues with Groupon's S-1 filing
 CEO takes the blame
 Andrew Mason forced to step down
-> Eric Lefkofsky became the new CEO

12. CORPORATE GOVERNANCE
SOCIAL RESPONSIBILITY
 Big supporter of social responsibility
 G-Team – team responsible for organizing events using the Groupon website to
support many causes
 Social Innovation team in Chicago
 Represent corporate social responsibility department
 Fall 2013 – development of two research projects
Is Groupon generating more economic activity?
Is Groupon shifting customers’ behavior?

13. EXTERNAL ENVIRONMENT- 5 FORCES
 Threat of entry (HIGH)
 Anyone can start an online discount business with enough capital.
 Buyer power (HIGH)
 There are low switching costs for consumers.
 Buyers are always asking for more discounts/lower prices.
 Supplier power (MODERATE)
 There are low switching costs for merchants.
 However, merchants are at the mercy of group buying sites.
 Rivalry (INTENSE)
 Fierce competition based on territorial expansion.
 Substitutes (HIGH)
 Many competitors.
 Easy to find similar deals on competitors’ websites.

14. EXTERNAL ENVIRONMENT- COMPETITION
 Groupon has five major competitors:
Living Social - offers one deal a day like Groupon
Tippr - same business model as Groupon but offers 3 deals
BuyWithMe - similar model but only offers deals if enough people
bought it
Kgbdeals - offers several deals per day but the quantity is very
limited
ScoutMob - offers discounts that will allow you to spend money at a
restaurant of your choice

15. INTERNAL ENVIRONMENT- SWOT
Strengths:
 Effective communication and fast transaction
 Innovation (=new way of purchasing)
 Large customers database
 Leader (currently) amongst competition
 Many brands and variety in products or services (serve large group of customers)
 Strong brand recognition
 Geographically diversified – operates in 48 countries
Weaknesses:
 Over leveraged financial position
 Only available in most major cities
 Usually first timer customers & rarely return
 Recurring high marketing expenditure to maintain growth

16. INTERNAL ENVIRONMENT- SWOT
Opportunities:
 Acquisition/Takeovers from large companies
 Opportunities to grow market for new products and services
 Partnership with social networks
 Growth & development of apps for smart phones
 Opportunity to tie up with Internet companies such as Google and Facebook to publicize
its deals and enhance its reach
Threats:
 Deals mostly offered on discretionary items
 There are no significant barriers of entry in the daily-deals segment
 Strong competition from Living Social and other competitors
 The purchase power could be lower in a big market (major cities)
 Economic crisis or slowdown

17. KEY SUCCESS FACTORS
 Need to provide best deals
 Lots of variety of deals
 Get customers to develop positive word of mouth
 Good access to channels
 Use transactional data to track customers’ preferences
 Take advantage of latest technology advances

18. STRATEGIC ALTERNATIVES
 Become the starting point for mobile commerce
 Redefine local commerce
 Enhance the email experience
 Continue to build out their categories
 Globalize the platforms and processes
 ??????

19. THE END
QUESTIONS?