Groupon, a ''deal of the day'' website with growing popularity has just reportedly rejected a $ 6 billion offer by Google. It's CEO Andrew Mason is obviously aiming to a higher level of achievement and maybe wanting to follow the steps of Facebook, who also rejected acquisition offers in the past and is now worth $ 40 billion as an independent company.
According to Forbes, Groupon is amazingly the fastest growing company ever, accumulating $1 billion in revenues before its second year of existence. The company has proved to everybody that it is viable and very profitable as a business model; it has been able to attract more costumers than its competitors (LivingSocial being the main one); and in a continuous way. Groupon was able to acquire and maintain a strong brand name; which is one of its most powerfull assets.
Refusing a $ 6 billion offer by Google might seem to be a risky bet from Groupon; especially considering the growing number of possible competitors in the market. However, this clearly shows that Mason believes in the potential of his company and has greater expectations than its competitors.
Groupon's choice to stay independent is from my point of view a great and exciting bet, especially if they continue growing at a similar rate; but they will have to find ways to stand out even more from their competitors if they want to stay on top.
Yes it is indeed a risky bet that Groupon is taking on by refusing Google's offer, and i guess it stems from the fact that Groupon is a business model that is yet reach its full potential in the current post recession market. I hope Groupon realizes the tough competition that lies ahead with other sites mimicking them poping up everyday it would be long before they lose their first movers advantage.
ReplyDeleteIts an ever changing market and soon they would have to come up with more ad ons to their deals to set them apart.As for how long Groupon can keep ahead of the market, only time can tell.
Earlier in the week when talks of the deal went public, I strongly believed that Groupon would take Google up on their $6B offer. But I'm also not surprised, Groupon has been playing hard to get ever since it was offered a deal by Yahoo! in October . from anywhere between 1.5 to 3 billion dollars. As I followed the news of the possible deal closely, I was amazed to see how strongly Google pushed to try and make this deal happen by increasing upon its principle offer from when the news broke.
ReplyDeleteI strongly believe that if Google had acquired Groupon it would have gained a valuable foothold into a business network focusing on local-level retailers and pushed it to the masses. I had heard of Groupon before, but never really trusted the company...after all steep discounts seem too good to be true.(maybe there are others that feel like me) If it were attached to a company like Google, I would have instantly recognized that it was a reputable company. I'm sure that there is a lot of growth potential for the company as it can still grow into further local areas, but it would have been better for the consumers everywhere if it made a deal with Google.
Clotilde, I agree with Padrond in that both Google and Groupon stood to gain much with the proposed acquisition. While Mason does seem to have considerable faith in his company's potential to reach greater heights, Groupon's advertising base is facing quick turnover and the competitors are beginning to hedge in on the remaining advertisers. Soon, the number of deals left to pursue will be limited. These reasons are more fully discussed in my blog, Marketing to the World.
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