The Groupon Story: From Startup To IPO

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The Groupon IPO Analysis : 5 Charts That Can Impact Investors

Gross Billings," which Groupon formerly classified as "Revenue," continues to grow strongly, rising 25% sequentially in Q3 to nearly $1.2 billion

Revenue," the portion of coupon sales that Groupon keeps, also grew, but much more slowly: Revenue increased 10% to $430 million.

Groupon’s IPO  Presentation Pitch

Groupon’s IPO roadshow pitch is revving into high-gear this week..One of Andrew Mason's tasks on Groupon Inc.'s roadshow this week is to demonstrate to investors that the three-year-old startup is growing up and is capable of acting like a public company.

Firing underperformers is one way. Mr. Mason told investors Wednesday during a presentation in Boston that the company is replacing the weakest 10% of its salesforce

 Groupon’s IPO  Presentation Pitch

 Failing to win enough repeat customers may dampen the rapid growth that currently supports the company's roughly $11 billion valuation

As of Sept. 30, Groupon had 143 million subscribers, but in the third quarter only 30 million of them bought Groupons. Groupon currently has a salesforce of over 4,800, according to its IPO prospectus.Repeat customers increased from the second quarter but only numbered 16 million, according to a regulatory filing with the U.S. Securities and Exchange Commission.

 Why is Groupon's  growth rate collapsing?

There are a few potential reasons why their revenue growth could be stalling.

According to  Yipit Reduced marketing spend.  While Groupon was able to break even this quarter, they did so by reducing their marketing spend. Unfortunately, marketing spend also fuels growth by acquiring new subscribers. Groupon grew their subscribe base by 23% this quarter. The previous quarter, they grew by 39%.

Competition. As competition in the space heats up with Google Offers, Amazon and LivingSocial, Groupon is getting crowded out of the inbox. In Q3, the number of Groupons sold grew just 1% despite Groupon growing their subscribe base 23%.

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Is The Groupon Story Going Bust ?

 Groupon almost broke even for the quarter, a huge change compared to the last year and a half. Operating income benefitted from a couple of one-time gains,

The reason revenue grew faster than the number of Groupons sold, meanwhile, is that revenue per Groupon increased

The number of coupons Groupon sold flattened in Q3. This contributed to the revenue slowdown.

The reason  Groupon Revenue grew more slowly than "Gross Billings" is that Groupon's "take rate" fell. (The "take rate" is the percentage of coupon sales that Groupon keeps.) Groupon says the take-rate fell because its product mix changed

Revenue," the portion of coupon sales that Groupon keeps, also grew, but much more slowly: Revenue increased 10% to $430 million.

Groupon's North American business is now nicely profitable, earning $19 million in adjusted operating income in Q3, a 12% margin

Market Opportunity For Daily Deal Sites

Only a few months ago, Groupon was the Internet's next great thing. Business media christened it the fastest growing company ever. Copycats proliferated. And investors salivated over the prospect of Groupon going public.

However Today The Groupon Story has turned upside down.. showing once again how fast  Internet Economy can  change and how little time it takes for a “  product  life cycles across the Internet  to  go bust …

 The start up  Daily Deal’s  Pioneer’s   expectations for the IPO that in June was valued as high as $25 billion has now sunk to   a valuation of  that is less than half that at between $10.1 billion and $11.4 billion  

Now Groupon faces concerns about the viability of its daily deals business model. The novelty of online coupons is wearing off. Some merchants are complaining that they are losing money — and customers— on the deals. And competitors are swarming the marketplace with offers and deals that makes  very  little  economic sense

"Groupon is a disaster," says Sucharita Mulpuru, a Forrester Research analyst. "It's a shill that's going to be exposed pretty soon."

Groupon shows what can happen when a startup experiences steroidal growth in an unproven industry.  Coupled  with that is  ; hordes of venture funds” who suddenly saw the next Big Amazon “ or the next “Ebay in Groupon .. In one way Groupon  is an emblematic of a business in infancy. According to  Investors   who tracks Daily Deals, “Groupon is facing are symptomatic of something more troubling: questionable accounting, an overvalued business model and an industry that is turning into the digital equivalent of junk mail”

The reason Groupon reached break-even is that it cut back sharply on marketing costs. Although the company's marketing efficiency improved (cost-per-new-customer dropped), Groupon also added fewer customers than it has in prior quarters. This, in turn, led to a slowdown in the company's revenue growth rate, especially in the North American business.

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American Holiday Shopping Trends: Why Online Coupons Are a Rage

Via: Drop Down Deals

 The Rise Of Digital Coupon and Holiday Spending .

 20 Statistics On Online Coupon Usage

1.      88.2 million consumers (47% of Internet users) plan on using online coupons in 2011

2.      92.5 million adult Internet users will use online coupons in 2012

3.      96.8 million adult Internet users will use online coupons in 2013

4.      Every hour spent couponing in 2011 is worth an estimated $100

5.      The average savings per coupon used was $1.44 in 2010

6.      74% of consumers search multiple coupon sources each week

7.      25% spend up to an hour shopping for the best online discount deals

8.      47% of respondents use more local deals and coupons than in 2010

9.      Moms are roughly twice as likely to search for coupons online as other categories of women

10.  52% of coupon users spend more than 15 minutes per week searching for coupons

11.  25% of coupon users spend between 30 minutes and 60 minutes searching for coupons per week

12.  $485 billion worth of coupons were distributed in 2010

13.  332 billion coupons were distributed in 2010, the most ever recorded in the U.S.

14.  Consumers saved $3.7 billion using coupons in 2010

15.  Distribution in 2010 exceeded 2009 by 6.8%, or 21 billion coupons

16.  87.7% of paper coupons were distributed in 2010 via newspaper inserts, for an increase of 19 billion coupons

17.  Digital offers increased by 37% in 2010

18.  The face value of coupons in 2010 increased 6.6%, to an average of $1.46 per coupon

19.  74% of coupons in 2010 required the purchase of one item and 26% the purchase of two or more items

20.  The average coupon expired in 10.1 weeks in 2010, 10 days shorter than in 2009

21.  Overall coupon redemption grew 3.1%, to 3.3 billion, in 2010

22.  78.3% of consumers reported using coupons regularly in 2010, up 14.7% from pre-recession levels

23.  Consumer coupon use in 2010 added up to $3.7 billion in savings, an increase of $200 million over 2009

source : Via

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