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Hundreds of start-up companies — imitators of Groupon, the group-buying Web site that offers daily deals on knitting supplies, skydiving lessons, barbecued ribs, pole-dancing classes and a smorgasbord of other stuff you may (or may not) want — are racing to find out. Groupon’s competitors have been called groupies, copycats and clones. But who can blame them? In just over two years, Groupon has accumulated 60 million subscribers, more than $1 billion in venture capital and $760 million in annual revenue to become the fastest-growing Web company ever. In December, it declined a $6 billion buyout offer from Google. Taking On Groupon : The Daily Deal Market Analysis for Followers and Challengers Recently Businessinsider posted a blog written by Jim Moran who is the co founder of Yipit. ARPS is determined by the following formula: 1)Avg Deal Price * Avg Commission % * Deals Per Year * Conversion % Per Deal * (1 – Annual Churn) = ARPS Ignoring profitability (fierce competition), Cost Per Acqusition is determined by: 2)ARPS / (1 – Viral Coefficient) = Max CPA Making simplifying assumptions about the cohorts / quality of users, Daily Deal services grow by spending as much as possible within their Max CPA. A remaining factor is the cities in which a service operates. The number of cities functions as a multiplier to the subscribers a service can add (more cities means more people). More importantly, the cost to acquire users varies by city. Cities with less daily deal competition have a lower average CPA, thus services can grow there more quickly. How These New Services Are SucceedingThe challengers are focusing on various components of these formulas to drive their growth:
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Showing posts with label Daily deal market. Show all posts
Showing posts with label Daily deal market. Show all posts