Developer

Groupon: Cheat Sheet

Bringing bulk-buying power to the consumer...

Groupon - isn't that someone who shows musicians extra special appreciation?

Not quite - although it is about sharing the love around when it comes to getting a good deal.

Groupon is a deal-of-the-day website that offers vouchers for products and services at a discount price, and has attracted more than 80 million users in the three years since it launched.

Discount vouchers, that's hardly new...

No, but Groupon's mix of discount shopping and bulk buying has caught the public imagination.

After a user buys a voucher for a discount deal there is an incentive to encourage friends, family and colleagues to sign up for the same offer, because deals are withdrawn if the required number of people don't take it up. Users can also earn money to spend with Groupon by inviting other people to sign up.

Groupon has proved the success of the social buying model

A deal on Groupon, the website that has put bulk-buying power in the hands of the consumer
Image: Groupon.co.uk

Each deal only stays on the website for a limited period of time before it is taken down – usually 24 hours.

The need to share deals as widely as possible, combined with discounts of up to 90 per cent on products and services, has fuelled the growth of the company, and today it operates in 43 countries worldwide.

What's on offer?

Pretty much anything. Groupon's recent London deals include vouchers for prescription glasses, spa visits, laser hair removal, a meal in a French restaurant and a session in a flotation tank.

But there is a limit to what Groupon is willing to offer. It reportedly steers clear of offering deals for certain services, such as strip clubs.

Is it easy to take part?

Yep, signing up to get deals sent to you is as simple as going to the Groupon website and registering your email address while purchasing a deal is just a case of pressing the 'Buy Now' button and entering your payment information.

Once the required number of people sign up for the discounted offering, the user is charged for the deal and emailed a link to a printable voucher.

I've logged on - the descriptions of deals are a tad... quirky.

The colourful, and often tongue-in-cheek, summaries of the products and services are one of the site's selling points.

For example, the description of a recent offer on Groupon's London website for a cut, style and finish began with: "Unbeknownst to many, the primary purpose of hair is to act as a getaway rope for deep thoughts that long to break free from the prison of the mind."

A recent discount voucher for a trip to London Zoo opens with "Rooooooooaaaaaaaaaaaarrrrr!".

If Groupon's so successful, why hasn't it been snapped up by a big tech player?

It's not like they haven't tried. In December last year, Groupon reportedly rejected an offer from Google of between $5bn and $6bn to buy the company.

Groupon's revenues have seen exceptional growth since Groupon CEO Andrew Mason founded the site in 2008. The site makes money by taking a cut of the cash from the sale of each voucher and the company is reported to be taking $2bn in revenue each year, as well as securing $950m in financing in January this year.

And in June the company filed for an initial public offering with the US Securities and Exchange Commission, through which it is looking to raise up to $750m.

Is Groupon here to stay?

Deal-a-day websites such as Groupon are relatively easy for competitors to set up, but Groupon's large user base and the trust that comes with being an established name gives it an edge.

More worrying for Groupon will be Google muscling in on the discount deals space, with the launch of its Google Offers service.

Online retailer Amazon has also shown interest in the deal a day model, investing $175m in deal-a-day, group-buying site LivingSocial.

Sounds like that's my better half's birthday taken care of - Groupon here I come.

Good thinking - nothing says "I love you" like a discount voucher for laser hair removal.

About

Nick Heath is chief reporter for TechRepublic. He writes about the technology that IT decision makers need to know about, and the latest happenings in the European tech scene.

Editor's Picks

Free Newsletters, In your Inbox