Groupon

Groupon is a deal-of-day website that features discounted gift certificates to its customers redeemable at local or national retailers. For retailers who are associated with Groupon, It offers several advantages through free advertising and marketing. For one thing, it’s always beneficial for companies to feature their business free on the Groupon web site. With traditional advertising and e-mail marketing, retailers pay lots of money up front with no guarantee that the message will reach the consumers and translate into sales. But, with tens of thousands of subscribers in most cities, Groupon offers free access to the inboxes of target customers. Another perk of working with Groupon is that the website shares customer information with its merchants. According to the Groupon privacy statement, it shares e-mail addresses of customers who buy a Groupon with the business that’s supplying the product or service.

Groupon’s growth – revenue, subscribers and merchants – rests on whale of an information technology. In few years, it has grown from a company that could be run on a simple spreadsheet to one that needs systems spread across the globe. As the subscriber base and the amount of information shared on Groupon websites and applications continue to grow, company needs an increasing amount of network capacity and computing power. Groupon has built systems for merchants to track deal performance and analytics for demographic data and capacity. Groupon has also been spending to prevent counterfeit coupons by issuing the redeemable coupons with unique identifiers. Also, Groupon could use data analytics and business intelligence to collect and analyze the customer data. They also can use the predictive analysis techniques and tool on these data to determine the buying trend and give appropriate discounts to customers.

I strongly believe that Groupon has no sustainable competitive advantage over its business rivals without proper infrastructure. Groupon does not provide value to many of its retailers which could be confirmed by a survey that says only 66 % of the retailers are profitable using Groupon’s services. Groupon hasn’t added much innovation to its business model since its inception and many other sites with similar offers have since picked up the market. Groupon may be the largest deal-a-day business, but with basically no barriers to entry, it has 383 rivals, according to Yipit. And the growing crowd of rivals threatens to steal customers and is driving up marketing cost. The growth of Groupon also created an increase of “deal comparison websites” from some deep-pocketed competitors like Amazon Local and Google Offers.

I would suggest Groupon leaders to come up with innovative ideas which combine business with technology and differentiate them from other competitors. They can partner with local retailers and sign a long term contract which avoids losing retailers to other competitors. They can also use the technology like GPS to provide offers to their customers on a real-time basis based on their location. This would require highly efficient IS framework which in turn requires a huge investment in the IS services, but at a long run it will definitely help Groupon to build a long term relationship with retailers and creating a huge customer base.

If we consider Resource-based view for Groupon’s business model, we can observe that Groupon’s business strategy and IS strategy are inseparable. IS strategy in fact drives the business for Groupon. Thus Groupon can make use of IS resources to gain and sustain competitive advantage. Company can launch their mobile and desktop applications across multiple platforms like Android, Windows, i-OS and Blackberry OS , etc. to broaden the customer base.