In what seems like an admission to me that their business model is non-defendable, and likely not to be long-lasting, Groupon is readying a new way to distribute deals. What they’re calling Groupon Now. users will download a GPS ready app, and search for deals near where they are via their smart phones.
I am no fan of Groupon’s current format as I’ve written about previously, and this one offers several improvements to what has been a bad structure for many businesses who used their daily deals to promote their business. Most notably the ability to have time specific offers, ones where you can select slow days or slow hours during the day, to offer and honor the promotion. Groupon is smart to adjust their system, and recognize the fact that it doesn’t work for many businesses.
But is it too late? They are trying to jump into the location game with offers as the only benefit to consumers, where dominant location based apps that have attracted loyal and regular users already exist. Think FourSquare and Facebook and Google Maps/Places, and merchants can offer many deals via these apps (that people already use) for free and on their own schedule as well. Why pay Groupon to do so?
Think about it. What percentage of people that have a smartphone are going to open an app like Groupon over and over to see what deals are nearby if they are disappointed in the variety? that is why Groupon has to find a way to get more offers on its app than the others. The problem is Groupon needs to take a cut, and the others are free for merchants. Top that off by noting that Facebook, Google, and FourSquare are known and trusted companies to both consumers and merchants. Their apps are already on most peoples phones, and people use them for more than just finding deals.
It looks like ‘Groupon Now’ may be too late, and their IPO can’t be soon enough. With the daily deal email space being flooded with competition, and their margins sure to shrink, Groupon must find way to get merchants posting deals via their app… what will convince you to offer deals there opposed to facebook, google, and foursquare to name the big three already in the location based space?