Groupon: Changing shopping as we know it

Groupon's meteoric rise was nothing short of exceptional, and it was one that had Forbes Magazine calling it "the fastest growing company ever." Acquiring tens of millions of users since 2008 led many to believe that Groupon was about to change the way people consumed and enjoyed their free time. However, on June 2, 2011, the company filed for an IPO and not everyone was impressed. Many voices berated the business model and the high marketing costs. They saw the entry barriers as being extremely low in this business, leaving Groupon little room to fight the competition. Despite this, others predicted that the business model would change and evolve to help the company maintain its advantage. In 2012, as Groupon was approaching the one-year anniversary of its IPO, the aforementioned change was already visible in the company's strategy. The mobile application, Groupon Now, which had experienced a rather slow and low-key start in 2011, was growing at a faster rate than the daily deals business by spring 2012. This application allowed for mobile flexibility and for merchants to relate to their customers in an entirely different way. Groupon Now was being hailed by many as the future of the company and provided a departure point from the original one-deal-a-day strategy. Nevertheless, doubts still existed about the long-term sustainability of the company and whether Groupon would be able to hold on to its lead against fierce competition in the online coupon market. This case study analyzes the competition, Groupon's evolving business strategy, and the ultimate sustainability of the business model.