After the failing of the Google/Groupon $6BN offer, Google have announced that they have been setting up their own. It sounds like you would expect if not better.. instead of having actual people making offers with merchants, they’re probably looking to automate the process and just throw servers at it. You’d sign up online, submit the offer you’re willing to give to your potential customers, and let the computers do the rest.
I don’t really have a problem with this, I’m guessing it’s similar to the engine behind AdWords, unless there’s thousands of people sitting there looking at these requests (Google is an algorithm rich tech company). It does bring trust into question though. If Google is putting it’s name to the vouchers, while an anonymous merchant is making these deals, there’s a large potential for people to re-neg on their offers and as such cause endless trouble for Google. Groupon itself if the comments on it’s app are anything to go by has a bit of a hit and miss track record for merchants disappearing under the pressure. Sure they don’t get any money from the coupon sales (possibly they still get their name out there for a bit of free advertising by never honouring their deals) but the size of Groupon also seems that it’s getting hard for unsatisfied customers to get their money back, or have any statutory rights at all. I haven’t looked at that so this and in fact the entire premise of this website is pure speculation.
I’m sure some people will question certain ethics as they always do with Google. Do they have the power to choke the competition out of growth by using their own ad networks and search engine as a way to jump the growth queue, or is google in a difficult position. I’ve seen figures suggesting that Groupon’s traffic is over 40% generated by Facebook, with about 8% going to google. If true that suggests as a bigger picture, that Facebook is more important than google since it pretty much IS the market when it comes to social, and we are now fully into the social web age. Search engines certainly have their place but in commerce is it still the dominating tool?
I’ve also heard mention that Google’s local search is poor at best, (equally they’re not top of the line with person to person customer relations from what I’ve heard.. can you easily .. ‘get them on the phone’ ? ). For me at least, my current go-to resource for what’s physically around me is Foursquare, since that’s got a really smart actually-reviewed place thing that means you’re almost doing the opposite of Googling what you think are keywords, you’re doing a completely location based search. How accurate you are with keywords is vague, a GPS just tells you where you are, the mapping or whatever clever geo technology they’ve got going there pretty much takes care of the rest.
So back to the vouchers.. well there’s a lot of Groupon type companies popping up at the moment, (more vocally since the Google offer) some will succeed and grow, and some will fail, it’s a matter of time to see which ones do well.
While this is all fine, many will miss the point that some small feature or other that will give them less than optimal virality, and as such the offers will not spread in the right way leading to the holy grail of exponential growth. Of course not many will.. with it being very early days for the niche that this is currently filling, I can see a not too distant future where a layer on top of online shopping will exist, potentially leading back to the spike of hits vs. the long tail. It’s also far from clear as to whether this is a wild west time where we will come out with clear winners who have strong unbreakable relationships with the brands.. once the deals have been made no competitor will come in and do it, or if the merchants will have any loyalty when the Craigslist approach comes along and decides to be fully automated and not take a cut, earning from advertising or some other model.
What is the interest in small businesses vs. large ones? Is it a case of the huge discount being the attraction or simply the fact that you trust the company that’s discounted? Have you heard of the company giving XYZ offer and do you care if you haven’t? Do you trust that the original prices are not inflated?
It remains to be seen if it’s a sustainable business at all. If the merchants are giving such massive discounts to get on the bandwagon, there’s a possibility that some won’t survive the drastic cuts in the cost of their service. If someone sees an offer for a £2000 item and only pays £120 (as one offer I saw) it firstly brings into question the actual value of the product.. what is their markup if they can afford to give essentially a 99% discount after the voucher company takes their slice? Of course it could be a loss leader, but will the same people who would happily pay £120 for a £2000 service actually pay full price ever? Are these the target customers?
I think there’s a lot of unanswered questions here, and also a lot of interesting opportunities. It is a space that I will be following closely in the near future, that much is clear.