Provide a review to the following Groupon article:

COLLAPSE

Do you like saving money? Better yet do you like Couponing ?Well if you do you will enjoy this case study. This case study is taking a look at Groupon. Groupon is an advertising platform that is largely geared toward serving local business andin their local markets.Groupon attempts to tap into the power of collective purchasing by offering discounts, as much as half off, to a group of people if they are willing to buy a product or service (Kagan, 2019).

Many restaurants and any other businesses use Groupon as a way to lure groups of newand repeat customers into their business. Basically, Groupon acts as the middleman connecting businesses with customers who willing to buy their services and products, the more customers that buy from the business, the more money Groupon makes (Kagan, 2019). The way Groupon works is fairly straightforward, A business creates a deal that is then listed on the Groupon's website and possibly featured in the emails it sends to local customers. Customers purchase the businesses discount voucher, and Groupon collects themoney on the business's behalf.Often times Groupon takes a cut ranging from 40% to 50% of the revenue generated from the sale the of voucher; the business gets the rest of the money (Kagan, 2019).

The thing that Groupon does that make businesses willing to pay for its services is provide businesses with a wide-ranging customer base through the company's extensive email list and social media presence. Businesses that use Groupon can profit from using Groupon if the Groupon customers come back after redeeming the voucher, promote the business to their friends or spend more than the face value of the Groupon. By using Groupon Businesses also have the potential to attract customers outside their target audience (Kagan, 2019).

Consumers should pay attention to Groupon because unlike standard coupons, Groupon lets shoppers pay the discounted price for goods in advance by buying the Groupon deal. The average Groupon provides a 50% discount, but it can also be as high as 90%.For example, arestaurantmay offer $50 worth of food for $25 or a $200 hotel package for $90 (Boyte-White, 2019).

Before Groupon early collective buying sites such as Mercata and MobShop didn't stand a chance of competing with the likes ofa company like Amazon when it came to pricing. Butwith establishment and success of Groupon it started a wave of new entrantsinto the collective buying ecosystem currently there are more than eight competitors in the collective buying arena.These new entrantshave also made it possible for there to be the threat of substitution for Groupon. Due to the way Groupon operates, the suppliers which are the businesses that sale their products or services at a discount on Groupon are at a disadvantage,the reason being for example, if a business normally charges $100 for private singing lessons (Kagan, 2019).At 50% off their normal rate, the business would be offering their lessons for $50 each to Groupon buyers (Boyte-White, 2019). But business would not make $50; they would only make $25 per lesson sold because Groupon take half of revenue. If the business offered singing lessons at 90% off on Groupon, the business would only be making $5 on each lesson. With those examples, businesses can easily lose money (Boyte-White, 2019). After a business discounts its products or services and allow Groupon to take its cut, a company might not even make enough to cover the cost of what's being advertised. If the deal doesn't earn enough repeat business, then the business is no better off than they were before it started doing business with Groupon (Boyte-White, 2019). The one good thing for businesses that find themselves losing money, is Groupon doesn't charge them any fees to pause or cancel service (Boyte-White, 2019). Within that same example, it's easy to see that the purchasers do not have any power when buying goods or services from Groupon. The purchasers can either buy the products or services from Groupon at the price that's set or not buy them at all. Those are the only two choices the buyers has. The buyers only have the power to dictate what discounts they are advertised.

When we look at Groupon Business model, we will see that it's a two-sided market model (Council, 2017).A two-sided market occurs when two user groups or agents interact through an middle man or platform to the benefit of both parties. The business model ties into Groupon objective of building the daily habit in local commerce ("Groupon Press"). Groupon is doing this by enabling real-time commerce betweenits two core customer groups which are local businesses and local consumers ("Groupon Press").

As for the viability of Groupon, Groupon has been a viable company since it was launched in November 2008. Since that time Groupon has by acquiring the other companies in different parts of the country and world to grow and expand its footprint.Unfortunately, all of the mergers and acquisitions that Groupon has done has not been enough to give it a first-time movers advantage over the competition or create barriers of entry for other companies. One of Groupon's biggest competitive threats is Google. Google has a large financial advantage over Groupon which makes them a big threat. Back in 2011 the company went through an IPO that was highly successful, the IPO had little to no effecton Groupon's go-to-market strategy or its relationship with local business. Since the years after the company's IPO, its revenues have seen a decline(Boyte-White, 2019). These declines are the result of increased competition and the struggle to maintain popularity with consumers.This lost in popularity cause Groupon to shift its business model away from a voucher-based approach to a card-linking one, where customers get cash back after using a specified linked credit card to purchase a product or service advertised on the Groupon (Boyte-White, 2019).

In summary Groupon has proventhat a business using the two-sided market modelcan be successful. Unfortunately, with the tremendous success thatGroupon has had there has been a number of different copycat business that have popped up and taken some market share from Groupon. This lost in in revenue and market share has forced Groupon to change their business model in order to stay viable and profitable.