Groupon Inc (NASDAQ:GRPN) management will have to regroup and replan

Posted by Chris Bell June 4, 2013 0 Comment 2325 views

For more than a decade now, the local Yellowpages and newspaper have been dying a slow death. This also leaves local merchants and small businesses at a point where they have almost no local advertising options at their disposal. This is where companies like Groupon Inc (NASDAQ:GRPN), ReachLocal and Yelp came center-stage and started grabbing the limelight. Yes, Groupon did at one point of time, manage to make a mark and operated profitably and was very popular too. However, the euphoria was short-lived. Reinventing local online advertising solutions need to find a scalable, simple way of connecting with customers who are seeking some real-time assistance. Somehow, no company has managed to do this in a sustainable manner.

The Groupon fiasco

Groupon Inc (NASDAQ:GRPN) is one classic example of a good idea gone wrong. It was obviously operating on a faulty business model. Everything said and done, that is something that could have been looked-into and rectified. But the other glaring fault was that the GRPN management with Andrew Mason, the CEO at the helm wore blinkers and set their sights only on aggressive growth. At a time when the company should have been focusing on restructuring its business model, it became obsessed with adding coal to the growth-fire. The result was that GRPN’s stock performance has bleak since its IPO in 2011 November 2011.

Change of strategy- need of the day

Groupon and Living Social, another daily deal site will have to see how they can help small businesses grow a strong customer- foundation who are interested beyond the next lowest-offer. Living Social is a brand that has been targeted by market watchers as one that will not see the light of 2014. This website has been trailing Groupon Inc (NASDAQ:GRPN) from the point of its launch. In this particular industry, trailing the leader is not really a good sign. Groupon’s financial troubles demonstrate how the daily deal industry has started crumbling even before it had created a strong foundation.

Its time Groupon made an effort to live up to the expectations of the company’s investors. All it needs to do is to shift focus. What could probably help would be to install mechanisms that will narrow the welfare gap between the users and retailers. This is not unachievable and both Groupon and Living Social can probably learn a ting or two from sites such as AmazonLocal and eBay.

About Chris Bell

Chris Bell is an investing reporter for GDP Insider. Chris covers financial markets and Wall Street, concentrating on developments affecting individual investors and their portfolios. Chris is also over consumer reporter and covers a wide variety of issues ranging from housing to immigration to urban poverty. Chris graduated from the University of Scranton with a degree in Communication and Philosophy. Chris's diligent investigations earned him the honor of being named "Best Reporter" once by the Headliners Foundation of Texas and once by the Houston Press Club.

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