Groupon is overvalued at at $25Billion. Caught up in a whirlwind of Investors all hoping that it will be ‘the one’, the next Youtube or Facebook.
It can’t be because it isn’t anything different to a normal offline business and is easily copied. All software can be copied I hear you say and that’s true. However, the real difference is that in the businesses that have grown to be the biggest in their sector they always offer a Freemium service (as do Groupon) to customers but also actually have a business model for businesses that works economically. Google paid search works. Full stop. You might like the reliance on PPC but it has built many real businesses.
Groupon only offers an opportunity to sell stock at deep discount. Retailers rarely make any money other than covering costs and so the market is limited. I haven’t spken to once retailer that really likes selling thourgh Groupon.
Groupon only has Revenues of Â£700m. How does that equate to $25Billion valuation with 6000 employees? Only if it can’t be copied – but it can be and has been (they say Living Social will be bigger than Groupon next year). In truth any business with a large email list can offer a Groupon alternative and win (look a Travelzoo’s success with their version of GrouponÂ now valued at $400m). If that’s the case my advice to any business is build your mailing list and then think of what you can flog them other than your main offering. If you do it quick you might find your local key cutting shop is valued at $300m!
I founded Net Effect to provide digital marketing tools and websites to Independent Travel Businesses who sometimes find it hard to compete online with the larger Online Travel Agents.
I started off my career in Zimbabwe with British American Tobacco having developed his love of travel from spending part of my childhood in Malaysia. I quickly realised that growing tobacco wasn’t the thing he wanted to devote his life to and so returned to the UK, trained as a Chartered Accountant and joined the travel industry as Finance Director of Simply Travel and then MD, later selling the business to TUI and after a brief spell with the travel giant, realised my passion was with small businesses.
Fast forward to 2011 and a number of different businesses I saw a niche to provide marketing tools and expertise to Independent Travel Businesses whom otherwise would be unable to find the right tools to help grow their business and Net Effect was founded
Net Effect now provide CRM and Quote software, email marketing, specialist holiday search and cruise search and marketing tools to over 200 clients.