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BERTILLE LION | CAREY BARGERON | RHYAUNA GUIDRYMGMT 6580 |DR. FRITZ
INTRODUCTION2007 creation of The Point by Andrew Mason2008 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 offered1st Groupon - deal for Motel Bar, located just downstairs from the Groupon office in Chicago, IllinoisEnd of 2009 Groupon had spread to 28 U.S citiesToday Groupon has expanded to 48 countries and over 500 markets
MISSION | CULTUREMission: 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 startupWe assume that people are fundamentally good and people are responsible adults Andrew Mason Examples: Open vacation policy, financial goals
WHAT MAKES GROUPON AWESOME?
CURRENT COMPANY PERFORMANCEFiscal year 2013:Gross billings - $5.8 billionRevenue - $2.6 billionOperating income (excluding stock compensation & acquisition costs) - $197.2 million for the full yearGross profit margin 58.34%Operating profit margin 2.94%ROE (-) 4.68%Free cash flow - $153 million (5.96%
CURRENT COMPANY PERFORMANCEGroupon is doing well in the daily deals market in terms of its market share and potential growth2013 59.1% market share
GROUPON, INC.59.1%OTHER24.3%LIVINGSOCIAL16.6%HISTORIC COMPANY PERFORMANCE
MAIN OPERATING METRICSSubscribers - total number of individuals that have completed registration through a specific date, less individuals who have unsubscribedin 2011, Groupon had 83.1 million subscribers. Cumulative customers - total number of unique customers that have purchased Groupons since 2009in 2011, it had 15.8 million customersFeatured merchants - total number of merchants featured in a given time periodIn 2011, the pool was up to 40,000 merchantsGroupons sold - total number of Groupons sold in a given time periodIn 2011, Groupon sold over 60 million Groupons total.
CORPORATE GOVERNANCEGroupon Senior Management Team 2013Chief Executive Officer & co-founder of the companyEric LefkofskyChief Financial Officer (since December 2010)Jason ChildSenior Vice President , Product management (leaving in March)Jeff Holden Chief Operating Officer (since May 2012)Kal RamanGeneral Counsel (since 2011)David SchellhaseSenior Vice President, Engineering and Operations (since April 2013)Sri ViswanathSenior Vice President, Global Marketing (since June 2011)Rich Williams
CORPORATE GOVERNANCE STRATEGIC ISSUESLack of management skillsEmployees grow up to 10,000Disconnect between top management & employees
Groupon went public November 2011Issues with Groupon's S-1 filing CEO takes the blameAndrew Mason forced to step down -> Eric Lefkofsky became the new CEO
CORPORATE GOVERNANCE SOCIAL RESPONSIBILITYBig supporter of social responsibilityG-Team team responsible for organizing events using the Groupon website to support many causesSocial Innovation team in Chicago Represent corporate social responsibility departmentFall 2013 development of two research projectsIs Groupon generating more economic activity? Is Groupon shifting customers behavior?
EXTERNAL ENVIRONMENT- 5 FORCESThreat 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.
EXTERNAL ENVIRONMENT- COMPETITIONGroupon has five major competitors:Living Social - offers one deal a day like GrouponTippr - same business model as Groupon but offers 3 dealsBuyWithMe - similar model but only offers deals if enough people bought itKgbdeals - offers several deals per day but the quantity is very limitedScoutMob - offers discounts that will allow you to spend money at a restaurant of your choice
INTERNAL ENVIRONMENT- SWOTStrengths:Effective communication and fast transactionInnovation (=new way of purchasing)Large customers databaseLeader (currently) amongst competitionMany brands and variety in products or services (serve large group of customers)Strong brand recognition Geographically diversified operates in 48 countriesWeaknesses:Over leveraged financial positionOnly available in most major citiesUsually first timer customers & rarely returnRecurring high marketing expenditure to maintain growth
INTERNAL ENVIRONMENT- SWOTOpportunities:Acquisition/Takeovers from large companiesOpportunities to grow market for new products and servicesPartnership with social networksGrowth & development of apps for smart phonesOpportunity to tie up with Internet companies such as Google and Facebook to publicize its deals and enhance its reachThreats:Deals mostly offered on discretionary itemsThere are no significant barriers of entry in the daily-deals segmentStrong competition from Living Social and other competitorsThe purchase power could be lower in a big market (major cities)Economic crisis or slowdown
16KEY SUCCESS FACTORSNeed to provide best dealsLots of variety of dealsGet customers to develop positive word of mouthGood access to channelsUse transactional data to track customers preferencesTake advantage of latest technology advances
STRATEGIC ALTERNATIVESBecome the starting point for mobile commerceRedefine local commerceEnhance the email experienceContinue to build out their categoriesGlobalize the platforms and processes