Groupon Inc (NASDAQ:GRPN) will have to recoup its strength to forge-on

Posted by Lynn Eisler August 30, 2013 0 Comment 5359 views

The daily deals business is not as exclusive as it used to be and many global giants are now venturing into this space and Groupon Inc (NASDAQ:GRPN) suddenly finds that it has some very strong competition. Facebook, the social network giant joined the fray a few years back but has not scathed Groupon yet. However, Google and Amazon have proved to be bigger threats.

The former has Google Offers while the latter has Amazon local. Groupon will have to pull up its socks if it wants to maintain a dominant position in the business. What is interesting to note that these big companies are coming to the fore after Groupon showed their CEO, Andrew Mason, the door.

Patches in place

What is also noteworthy is the manner in which GRPN has rallied in 2013. Year-to-date it is up by over 100% despite its dull Q1 results. It should be remembered that this had been the last straw in Mason’s ouster. The next big challenge for the company is to maintain this momentum or at least manage to maintain the same level of performance. There were some bright results from North America for the company in the Q2 with a 30% rise.

The goods market

Eric Lefkofsky also took over the CEO reins and Ted Leonsis was appointed Chairman of the board. To a certain degree this will help in allaying the fears that investors harbored about the leadership of the company. The company has truly been struggling to refresh its core-market business even as it leverages Groupon Goods. Amazon Local is a major contender in this space that Groupon will have to deal with in an aggressive manner if it really wants to make progress.

There are quite a few more social-selling startups that now have venture-funding and are increasing the competition in the deals business. The barriers to entry are very low and this has made it extremely easy for numerous clones to enter the daily-deals business.

About Lynn Eisler

Lynn Eisler is a national news reporter focusing on economic issues, data analysis and the financial health of state and local governments. Lynn has been honored with the H.L. Mencken Award for Investigative Reporting, the Champion of Justice Award for reporting on the drug war, and the John Hancock Award for business reporting. Lynn was also a Knight Medical School Fellow at the University of Michigan.

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