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The Rise and Evolution of Groupon: From Group Deals to E-Commerce Powerhouse

Groupon: The Evolution of a Market Powerhouse

Have you ever heard of Groupon? If you’re reading this article, you likely have, but do you really know what Groupon is?

In this article, we’ll take an in-depth look at Groupon’s business model and history, as well as its ownership and mission, to give you a comprehensive understanding of this e-commerce giant. Groupon’s Founding and Early Years

Groupon was founded in 2008 by Andrew Mason, whose previous venture, The Point, was a social activist site that aimed to bring people together to take collective action on issues that mattered to them.

Mason pivoted The Point to become Groupon, which started out as a platform for group deals, offering consumers discounts on everything from dining and entertainment to travel and beauty services. In its early years, Groupon faced a lot of skepticism, with many questioning whether its business model could be profitable in the long run.

However, Groupon proved naysayers wrong, demonstrating impressive growth and profitability through effective marketing and partnerships that helped to expand its reach.

Expansion and Growth of Groupon

Groupon’s success in the United States paved the way for its expansion into European markets, where it quickly became a market leader. In 2011, Groupon was valued at $16 billion after several rounds of funding, making it one of the fastest growing e-commerce companies in history.

One notable event that shaped Groupon’s growth was a $6 billion buyout offer from Google, which the company rejected, opting to go public instead. Groupon’s IPO in 2011 was the biggest public offering by a U.S. internet company since Google’s IPO in 2004.

Groupon’s active customer base has also been a key driver of its growth. As of the fourth quarter of 2020, Groupon had over 47 million active customers, demonstrating the company’s staying power despite increased competition in the market.

Ownership of Groupon

Today, Groupon is owned by Groupon Inc., a publicly traded company headquartered in Chicago, Illinois. Kedar Deshpande currently serves as Groupon’s President and Chief Operating Officer, overseeing the company’s day-to-day operations.

Groupon’s Mission Statement

Groupon’s mission is to be a daily habit in local commerce, connecting people with businesses in their communities. The company’s community-building approach is reflected in its mission statement, which emphasizes the importance of creating positive relationships between consumers and the businesses they patronize.


Overall, Groupon’s success can be attributed to its innovative business model, effective partnerships, and strong community-building ethos. Although the company has faced challenges in recent years, such as increased competition and changing consumer preferences, its ability to adapt and evolve has kept it at the forefront of the e-commerce industry.

As Groupon continues to grow and expand internationally, it will be exciting to see how the company continues to innovate and shape the future of local commerce. How Groupon Works: An In-Depth Look

Groupon is a platform that connects consumers with businesses offering discounts on products and services.

In this article, we take a closer look at the inner workings of Groupon, including how it works, how the company makes money, and coupon expiration dates and restrictions.

Discount Coupons and Vouchers

Groupon offers deals and discounts on products and services provided by local businesses. The discounts offered on Groupon are usually high, with loss-leader pricing often being used to entice customers to buy.

In contrast, businesses hope that customers will return and make additional purchases beyond their discounted item to make a profit. Groupon provides a platform for businesses to offer discounts and vouchers to customers.

In return for offering these discounts, Groupon charges businesses a commission on sales made through its platform. Groupon’s philosophy is based on bringing new customers to local businesses through its platform.

For local businesses, this can be an attractive prospect because Groupon offers the potential to reach a large number of local customers. However, it is worth noting that not all businesses benefit equally from offering discounts through Groupon.

For businesses that typically offer high-profit margins, it may not be worth the expense of offering a loss-leader discount to attract new customers.

Coupon Expiration Dates and Restrictions

When you purchase a deal on Groupon, it will often come with an expiration date, beyond which the coupon is no longer valid. The expiration date is usually set by the business offering the deal, with Groupon acting as an intermediary.

Some deals may also come with restrictions, such as only being available to first-time customers or being limited to certain days of the week. It is important to make sure you are aware of any expiration dates and restrictions when buying deals through Groupon.

In some cases, you may be able to get a refund if you are unable to use the coupon before it expires, but this will depend on the specific deal and vendor.

Commissions on Sales

Groupon makes money by charging a commission on sales made through its platform. The commission rate varies depending on the specific deal and industry, but Groupon typically takes a percentage of the sale price for each voucher sold.

For businesses that choose to offer discounts through Groupon, the commission is seen as an advertising and marketing expense. Businesses can choose the commission rate they are willing to pay, and Groupon offers shared revenue streams on some deals to incentivize businesses to offer high discounts.

Revenue from Card-Linked Offers

In addition to commissions on sales, Groupon also generates revenue through card-linked offers. Groupon offers cashback and discounts on purchases made using a card linked to the Groupon app or website.

When a customer makes a purchase using a linked card, Groupon receives a percentage of revenue from the merchant. Card-linked offers can provide a steady stream of revenue for Groupon, as they do not require a commission to be taken on each individual sale.


Groupon has been successful in connecting consumers with local businesses, offering high-value discounts, and coupons for local products and services. While the company has faced competition in recent years, its innovative business model means that it continues to hold a prominent position in the market.

Despite some businesses expressing concerns about the financial implications of offering loss-leader discounts through Groupon, the platform has been successful in expanding the customer base of thousands of local businesses. As Groupon continues to evolve and adapt to meet changing consumer needs, it will be interesting to see what new revenue streams the company develops to remain competitive in the e-commerce industry.

Groupon’s Customer Segments and Value Propositions, Channels, and Customer Relationships

Groupon’s success can be attributed to understanding its customers’ needs and developing value propositions that meet their expectations. In this article, we take an in-depth look at Groupon’s customer segments and value propositions, as well as the company’s channels and customer relationships.

Customer Segments – Merchants

Groupon’s customers can be divided into two main segments: merchants and consumers. Merchants include both large national brands and local businesses, encompassing various business types, such as restaurants, spas, travel, and entertainment.

The value proposition to merchants is to increase sales and customer traffic by offering loss-leader deals. These offers are aimed at attracting new customers who will make additional purchases beyond their discounted item.

Through Groupon, businesses can also target specific customer segments, such as families or tourists, who may be more likely to be interested in their products or services. Merchant partnerships also help Groupon to expand its network of businesses, which can boost the company’s reputation and increase its customer base.

Finally, Groupon provides merchants with data on sales, customer demographics, and purchase behavior, which can help them improve their marketing strategies and customer service.

Customer Segments – Consumers

Consumers are the other main customer segment for Groupon. Groupon’s value proposition to consumers is centered around offer discounts on local businesses and travel deals.

Groupon enables consumers to access deals and promotions that they may not be able to find elsewhere. The deals on offer are often focused on geodemographic segmentation, interests, or browsing history, ensuring that consumers receive offers that are tailored to their preferences.

Additionally, Groupon offers a range of products and services, targeted at specific segments such as families or young people, which cater to customers’ specific needs. The deals and vouchers also come with expiration dates, which add urgency and encourage customers to make purchases.

Channels- Distribution Channels

Groupon uses several distribution channels to reach its customers. The company’s primary distribution channel is its website and mobile app, where customers can browse deals and vouchers, purchase daily deals and redeem offers.

Groupon also uses e-mail offers and social media, such as Facebook and Twitter, as well as search engines to reach out to potential customers. Groupon’s website and app provides a comprehensive range of products and services, enabling customers to browse and purchase deals effortlessly.

In addition, the platform’s search function allows customers to search for specific deals, and the website’s reviews section provides customers with honest reviews of products and services offered by local businesses. By utilizing social media and email, Groupon extends its reach even further, creating a connection with its audience across multiple touchpoints, ultimately resulting in higher sales and profits.

Customer Relationship Management

Groupon’s value proposition to its customers is centered around creating a collaborative approach to local commerce, and this is evident in the company’s customer relationship management strategy. Groupon achieves active marketing by focusing on providing support to both customers and merchants.

The company provides support to merchants through marketing initiatives, helping them to increase sales, access data and metrics and encouraging them to collaborate with other businesses to reach out to customers more effectively. Groupon’s merchant-facing approach allows businesses to respond to the needs of consumers and meet their demand, in turn bringing more customers and adding value to the local economy.

In addition, Groupon also collaborates with merchants to provide a review system through which customers can provide feedback on their experiences, which further improves customer satisfaction. By encouraging collaboration between merchants and customers, Groupon pushes brands and products and drives repeat business, in turn increasing customer loyalty and decreasing churn.


Groupon’s value proposition is focused on providing discounts to both merchants and customers, creating a collaborative approach to local commerce, and boosting the local economy. Groupon’s distribution channels are focused on providing customers with easy access to deals on its online platform and its website, mobile app, e-mail offers, social media efforts, and search engines.

By implementing a customer-focused relationship management approach and providing support to both customers and merchants, Groupon is able to maintain a loyal customer base even as competition in the market increases over time. Groupon’s Cost Structure and

Key Resources,

Key Activities, and

Key Partners

In order to effectively operate its business, Groupon has a clear cost structure and relies on key resources, activities, and partners.

In this article, we dive deeper into Groupon’s cost structure and key resources, as well as its key activities and partners.

Cost Structure – Cost Elements

Groupon’s cost structure includes various elements that are essential to its operations. One significant cost element for Groupon is credit card fees.

Since Groupon facilitates transactions between customers and merchants, it incurs fees associated with processing payments made through credit cards. These fees can be a significant expense, especially considering the volume of transactions that take place on the platform.

Another key cost element for Groupon is technology maintenance. Groupon’s online platform and mobile app require constant maintenance and updates to ensure smooth functionality and optimal user experience.

This includes expenses related to server maintenance, software development, and cybersecurity measures to protect customer information. Marketing expenses are also a significant cost for Groupon.

The company heavily relies on marketing initiatives to attract customers and promote deals. These expenses include advertising campaigns, digital marketing efforts, and partnerships with influencers and celebrities to increase brand awareness and drive traffic to the platform.

Key Resources

Groupon’s success relies on several key resources that are essential to its business model. One of the most critical resources for Groupon is its selection of deals.

Groupon needs to curate a diverse range of deals and discounts across various categories to cater to different customer preferences. This collection of deals helps attract customers and keeps them engaged with the platform.

Customer data is another crucial resource for Groupon. The company collects and analyzes customer data to gain insights into customer preferences, behavior, and purchasing patterns.

This data allows Groupon to personalize offerings and promotions, enhancing the customer experience and improving the relevance of deals. Additionally, Groupon relies on its workforce as a key resource.

The company employs a team of professionals across various functions, including sales, marketing, customer service, and technology. These individuals contribute to the overall operations of Groupon, ensuring efficient marketplace growth, customer support, and effective marketing strategies.

Key Activities

Groupon’s key activities revolve around marketplace growth, marketing, expansion, and customer support. Marketplace growth is a critical activity for Groupon as it focuses on expanding its customer base and attracting new merchants to the platform.

This involves reaching out to potential customers through various marketing channels, offering incentives to sign up, and collaborating with local businesses and national brands to ensure a wide range of offerings. Marketing is a key activity for Groupon to create brand awareness, promote deals, and drive customer acquisition.

The company utilizes digital marketing strategies, social media campaigns, and targeted advertisements to reach potential customers and encourage them to engage with the platform. Expansion is another significant activity for Groupon as it aims to enter new markets and expand its reach globally.

This involves conducting market research, identifying potential opportunities, and establishing partnerships with local businesses to ensure a seamless entry into new regions. Customer support is a vital activity that Groupon focuses on to maintain customer satisfaction.

The company provides assistance to customers regarding deal purchases, redemption, and any issues or inquiries they may have. Customer support plays a critical role in building trust with customers and ensuring they have a positive experience with the platform.

Key Partners

Groupon’s key partners include local businesses, national brands, and payment providers. Local businesses play a crucial role as they offer deals and discounts through Groupon’s platform.

Groupon collaborates with these businesses to curate attractive deals and attract customers. National brands are also important partners for Groupon, as they bring brand recognition and offer deals that appeal to a broader customer base.

Payment providers are instrumental partners for Groupon as they facilitate secure and seamless transactions on the platform. These providers ensure that customers can easily make payments, and merchants receive their funds in a timely manner.

By partnering with reliable payment providers, Groupon adds value to its platform and builds trust with customers and merchants.


Groupon’s cost structure is composed of credit card fees, technology maintenance, and marketing expenses, among others. The company’s key resources include its selection of deals, customer data, and its dedicated workforce.

Key activities revolve around marketplace growth, marketing, expansion, and customer support. Groupon’s key partners include local businesses, national brands, and payment providers, all of which contribute to the success of its platform and services.

By effectively managing its cost structure, leveraging key resources, carrying out essential activities, and fostering strong partnerships, Groupon continues to thrive in the competitive e-commerce industry. Groupon’s Competitors and SWOT Analysis: A Comprehensive Look

Groupon operates in a competitive market, and understanding its competitors is essential for its success.

In this article, we examine Groupon’s primary competitors, Gilt City and Scoutmob, as well as conducting a comprehensive SWOT analysis of Groupon’s strengths, weaknesses, opportunities, and threats.

Competitors – Gilt City

Gilt City is one of Groupon’s primary competitors, offering group discounts and daily deals on a wide range of products and services. Gilt City focuses on providing exclusive luxury deals in major cities, catering to customers looking for high-end experiences.

Gilt City differentiates itself from Groupon by curating deals that are tailored to a more affluent customer base. Instead of offering mass-market discounts, Gilt City provides access to prestigious brands, high-end restaurants, and luxurious travel experiences.

By targeting a specific niche, Gilt City aims to attract customers who value exclusivity and premium offerings.

Competitors – Scoutmob

Another competitor in the market is Scoutmob, which distinguishes itself by focusing on independent manufacturers and unique products. While Groupon and Gilt City primarily offer deals from businesses and service providers, Scoutmob focuses on supporting local artisans and independent manufacturers.

Scoutmob offers a wide range of products, including handcrafted jewelry, home decor, and artisanal food and beverages. By supporting local businesses and independent creatives, Scoutmob creates a sense of community and connects consumers with unique and one-of-a-kind products.

While Groupon and Gilt City have a broader reach, Scoutmob appeals to customers who value supporting local economies and embracing unique products.

SWOT Analysis – Strengths

Groupon has several strengths that have contributed to its success in the market. One of its primary strengths is its dedicated workforce.

Groupon employees are committed to delivering excellent customer service, curating attractive deals, and maintaining relationships with merchants. The talented workforce plays a crucial role in Groupon’s ability to adapt to changing market dynamics and provide excellent customer support.

The Groupon brand is another strength. It has become synonymous with daily deals and discounted offerings, making it a recognized name in the e-commerce industry.

The Groupon brand helps attract customers and build trust, as consumers associate it with value and savings. Groupon’s relationships with suppliers and merchants are also a significant strength.

By partnering with a wide range of local businesses and national brands, Groupon offers a diverse portfolio of deals, catering to different customer preferences and interests. Automation is another strength for Groupon.

The company has invested in technology and processes that automate deal management, payment processing, and customer support. This automation helps streamline operations and improve efficiency, enabling Groupon to handle a large volume of transactions and provide quick and seamless customer experiences.

SWOT Analysis – Weaknesses

One of Groupon’s weaknesses is its ability to consistently innovate. As the market evolves and customer preferences change, Groupon needs to stay ahead of its competitors by continuously introducing new features, services, and offerings.

This requires a strong focus on research and development, which has been a challenge for Groupon in the past. Groupon’s expansion efforts have also posed challenges.

Expanding into new markets requires careful planning, market analysis, and adaptation to local business practices. Groupon has faced difficulties in expanding successfully into some international markets, leading to setbacks and a slower pace of growth.

SWOT Analysis – Opportunities

Groupon has several opportunities to capitalize on. One opportunity lies in the transportation industry.

With the rise of the sharing economy and mobility services, there is an opportunity for Groupon to partner with transportation providers to offer deals on ridesharing, car rentals, and other transportation services. During times of economic recession, consumers tend to be more value-conscious.

This presents an opportunity for Groupon to emphasize its value proposition and attract customers who are looking for discounted products and services to save money. Furthermore, Groupon can explore new markets and expand its presence globally.

By entering untapped markets, Groupon can tap into new customer segments and increase its geographical reach, potentially driving significant growth for the company.

SWOT Analysis – Threats

Competition is a significant threat to Groupon. As the daily deals market continues to grow, new competitors emerge, posing a challenge for Groupon to differentiate itself and maintain its market share.

Competitors like Gilt City and Scoutmob, with their unique value propositions, can lure customers away from Groupon. A shortage of workforce is another threat that Groupon needs to address.

With rapid growth and expansion, attracting and retaining qualified employees can be challenging. Groupon needs a skilled and motivated workforce to ensure efficient operations and maintain its competitive edge.

Lastly, legal and regulatory factors can pose threats to Groupon’s operations. Laws regarding consumer protection, privacy, and advertising can impact Groupon’s business practices.

Adapting to these evolving legal requirements and ensuring compliance is crucial for Groupon’s long-term success.


By understanding its competitors and conducting a thorough SWOT analysis, Groupon can navigate the market effectively and capitalize on its strengths, address weaknesses, and seize opportunities while mitigating threats. With a focus on innovation, expansion into new markets, and maintaining strong customer and merchant relationships, Groupon can remain a competitive force in the e-commerce industry and continue to lead the way in discounted offerings and daily deals.

In conclusion, this article provided an in-depth examination of Groupon’s business model, history, ownership, mission, and how it operates. It discussed Groupon’s customer segments, value propositions, channels, and customer relationships.

Additionally, it explored Groupon’s cost structure, key resources, activities, and partners. Moreover, the article analyzed Groupon’s primary competitors and conducted a comprehensive SWOT analysis.

Groupon’s ability to adapt to changing market dynamics, maintain strong relationships with merchants and customers, and leverage its brand recognition are key strengths. However, it needs to focus on consistent innovation, effective expansion, and addressing legal and regulatory challenges.

Takeaways include the importance of understanding customer needs, establishing strong partnerships, and staying ahead of competition through innovation. In a highly competitive industry, Groupon’s ability to evolve will be crucial to its continued success in the market.

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