Quote:
Originally Posted by GGG
That's interesting, I figured on the Groupon end it would be pure profit. They take 50% of the profit and don't do anything. Advertising is word of mouth referal based. They must have a messed up expense structure somewhere.
The biggest weakness in groupon is that they aren't really anything other than a mailing list. Other than that list anyone can set up the identical company.
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That's not really true. Groupon spends a ton of money on web display ads and google adwords. I see their ads everywhere online, and I'm already signed up, so those impressions are wasted $$.
Also, they have commission salespeople. Here:
http://answers.onstartups.com/questi...-groupon-using
indicates that their salespeople are bringing down 36k + 2-3% commission to start, which is a few bucks on some of those deals that sell thousands of vouchers.
Also, there is staff at head office in Chicago that writes all the banter they put on each deal. I'm not sure what stand up comedians make when they get day jobs, but there's a cost there.
And finally, the referral process. They've been having more and more generous promotions to get new sign ups, probably trying to juice revenue for their IPO.