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Groupon

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Groupon
Groupon logo.
Type of site
Electronic Commerce
Available inEnglish
OwnerThePoint, Inc.
Created byAndrew Mason
URLhttp://www.groupon.com
CommercialYes
RegistrationNone

Groupon is a deal-of-the-day website that is localized to major markets in the United States. The first market for Groupon was Chicago, followed soon thereafter by Boston and New York City. As of January 2010, Groupon serves more than 40 markets. Groupon debuted in November 2008 as part of The Point, a platform for collective action.

The idea for Groupon was created by, now CEO, Andrew Mason. The idea subsequently gained the attention of his former employer, Eric Lefkofsky, who provided $1 million in "seed money" to develop the idea. The site launched in November 2008.[1]

Business Model

The company offers one "Groupon" per day in each of the markets it serves. The Groupon works as an assurance contract using ThePoint's platform: if a certain number of people sign up for the offer, then the deal becomes available to all;[1] if the predetermined minimum is not met, no one gets the deal that day. This reduces risk for retailers, who can treat the coupons as quantity discounts as well as sales promotion tools. Groupon makes money by getting a cut of the deal from the retailers[2].

Marketing

Groupon focuses on unusual, special or niche things in each market. Previous Groupons have included whale watching, personal trainers, teeth whitening, golf, cooking classes, sports and theatrical events, and a variety of bars and restaurants. Each day's deal is accompanied by an irreverent, tongue-in-cheek description, similar in style to Woot.

ThePoint

Groupon is built on ThePoint's collective action engine. Based on the concept of an assurance contract, the system works by a predetermined number of people joining a campaign or a threshold amount of money being pledged to it. Once that "tipping point" is reached, pledges (if any) are called in, and the action takes place. Groupon also works with the same model: a certain number of people need to sign up for the daily deal, or no one gets the deal. Founded by Andrew Mason, ThePoint debuted in January of 2007.[1]

Funding

ThePoint and Groupon are partially funded by an investment from New Enterprise Associates, one of the largest technology investors in the United States. Eric Lefkofsky and Brad Keywell are also lead investors.

In April 2010, it was announced that Groupon raised $135 million from Digital Sky Technologies, a Russian investment firm.[3]

Competition

References

  1. ^ a b c Cohen, Deborah (June 10, 2009). "Virtual "tipping point" leverages group deals". Reuters. Retrieved 30 November 2009.
  2. ^ Boston, Gabriella (July 8, 2009). "Site leverages power of group purchases". Retrieved 30 November 2009.
  3. ^ Kim-Mai Cutler, VentureBeat. "Groupon Raises $135M from DST, signaling social buying comes of age." April 19, 2010.
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