Business Model of Groupon and How Does Groupon Make Money?

Founded in the year 2008, Groupon is an American Company that offers Online Deal Marketplace. The business model of Groupon revolves around connecting local consumers or subscribers with the local merchants.

In this post, we will be diving deep into the world of Groupon Business Model and understand how it makes money. So, without wasting any more of your time, let us start deciphering the business model of Groupon straight away –

Introduction to the Business Model of Groupon

We have heard a lot of times about the company known as Groupon, and there is no doubt that we know a lot of things about it as well.

However, it is one thing to know about the company and a whole other thing to have an idea about the business model of the company.

So, the channelization of the business model of Groupon is based upon the philosophy of offering an e-commerce marketplace where local consumers can connect with merchants to get the products and services of their choice at a discounted price.

In the process-

• Consumers buy products and services at a discounted price
• Merchants meet with a wider base of qualified local consumers

There is no doubt about the fact that Groupon is one of the most amazing and popular companies that we have in the industry of Online Deal Marketplace these days.

The company is known to be the fastest company that ever reached the valuation milestone of 1 billion dollars the first time. So, there is no doubt that this company is something that you need to know about for sure.

We wouldn’t be wrong if we say that this company is one of the pioneering names when it comes to the online deals these days.

Groupon, as a company, has managed to grab a position in the online platform world where the users can discover certain things to do or see or eat or buy and save the things as well.

The company is very much known for the fact that the users find the site pretty easy to use as well.

Working of Groupon can be understood as a middleman who can make money from the different connections that it makes between the customers and the businesses.

Before we get to the discussion of the business model of Groupon, it is important to know a bit more about the company as a whole. So, here we are going to discuss a little bit about it in the best way.

So without any further ado, let us get started in the best way to learn a little bit more about Groupon as a company.

What is Groupon and Business Model of Groupon

For those who want to know a bit more about Groupon, we can say that it is a hyperlocal online platform which can be used to make sure that the customers can connect in the best way with all the businesses that are locals and functioning in their area.

It also connects the local businesses that are ready to offer products and services at discounted prices with the right kind of consumers.

So, in a way, the customers will be able to have the products, services, and experience and much lower prices for sure.

As mentioned earlier, it was in the year 2008 when the company Groupon came into existence, and the founder of the company was Andrew Mason.

The man wanted to provide some amazing group discounts to the people, and hence the name of the company came to exist from this idea itself.

Groupon is the inclusion of Group and Coupon.

However, with time, mason decided to change all the operating models that were used by the company to have a much better and more amazing share of the marketplace online.

Now the company allows the customers and the businesses from all over to discover things about each other and then engage with each other in the best way.

So, this is all you need to know about the company as a whole.

One can access the Groupon platform in two ways. First one is the website of the company, and the second one is the mobile application.

Let us now dig deep into the business model of Groupon to understand how it channelizes the association between local consumers and local merchants-

Understanding the Business Model of Groupon

We have already established the fact that Groupon is one of the best ways with the help of which the company can earn a lot of money for sure.

However, there is no doubt that how the company earns money might be a little bit of a mystery to the people these days. So, to know more about the company, one needs to know the business model. That is one of the main reasons why you need to know about it for sure.

When we are talking about the business model of the Groupon Company, there is no doubt that it has changed from time to time and developed over the years of success that it has seen. We can easily say that the company is just a market place, just like Alibaba or Amazon in the best way.

However, there is a little difference between the other common market-places and Groupon. Hence, we are going to have a look at it to have a better understanding of the concept in the best way.

When we are talking about the marketplace of Groupon, we can say this without a doubt that it is where the deals are marketed.

The services and the products that are to be provided to the customers will be properly listed on the Groupon website, and then people will be able to choose from the amazing options that they have.

These are the products that are available to the people and that too, with some very large discounts for sure. That is exactly what we know as deals.

The company will be able to capitalize on the revolutionary scarcity principle to make sure that they can sell these in the first place.

Working Of Groupon for Customers 

We have already established the fact that Groupon is one of the amazing sites which can be called as the amazing site for the deals. The customers of the site will be able to explore the products that they want to have, and they will also be able to save a lot as well.

There are different services and products that are provided by local businesses these days.

So, there is no doubt that the company customers will have one of the best chances to make sure that they can make use of the amazing sales and discounts that are available in the best way.

Not just that but this amazing platform also makes sure that the user experience of every single person visiting the website is enhanced in the best way with the help of targeted and amazing advertisements as well as the personalized emails too.

So, the customers will be able to save a lot of time and effort as well.

This is one of the main reasons why the company is so popular among the people for sure. The customers will be able to have the deals as well as the discounts in the best way, and these are provided to them in coupons that are digital in the form.

So, there is no doubt that the Groupon company provides a lot of benefits to the users and the customers for sure.

Different marketing techniques that the company uses to get its customers are-

• SEO or Search Engine Optimization
• SEM or Search Engine Marketing
• Affiliate Channels
• Email and Push Notifications
• Social and Display
• Television and other Offline Channels

Working Of Groupon For Sellers or Merchants | Business Model of Groupon

When it comes to the sellers who want to sell their products on the platform of Groupon, then there is no doubt that they will be very much benefitted for sure.

The Groupon company manages to provide the sellers with highly qualified customers.

The merchants are provided with the customers, and then they will get the amazing commissions for the merchants for giving them the customers in the first place for sure.

The merchants are really very much benefitted from the platform of Groupon because they will be able to get more partnerships with the people.

The merchants are indeed able to sell their goods and products in the best way with the help of more and more customers. However, there are some of the recurring customers, and there is a chance that these customers will visit the merchant selling the products to them again.

So, we can say this without an inch of doubt that the company is doing a lot to provide the merchants with more and more benefits for sure.

By offering the ease of sales operations, Groupon pulls in and retain more and more numbers of merchants. Groupon also assists merchants in editorial, customer service, merchant service, deal management, technology, logistics, merchandising, etc.

How Does Groupon Earn Money?

Now that you have an idea about the business model of the company, we are pretty sure that you would want to know about the revenue model of the company and how it can earn money in the best way.

Well, the revenue model for Groupon is certainly very amazing for sure. There are the merchants that provide the commission to the company in exchange for the customers that they get in the first place. This is one of the major sources of income for the company.

However, there are some other ways, such as sales. It is really important for people to know about it in the best way so that they can find some inspiration from it.

Sales of vouchers and card-linked deals also play a key role in helping Groupon make good money.

Groupon also generates direct revenues from the merchandise of sale inventory, plus third part revenues also help the company generate revenues.

Wrapping it up!

So, that is all about the business model of Groupon.

With an efficient model to connect local consumers and merchants, Groupon is writing a new story of success. By the end of the year 2017, the company’s revenue was US$2.84 billion, and its new strategies are quite promising that will only take the business to the new heights.

How effective do you consider the business model of Groupon? Share your thoughts with us in the comments.

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