Yesterday the Tribune reported on Groupon scaling back their IPO, from which they had hoped to raise the equivalent of Norway's GDP. Today's Economist has more:
Groupon created a new market. This is a boon to consumers, but confers no lasting “first-mover” advantage on Groupon. Its business model is unpatentable and simple to replicate, so there are already more than 20 copycats.
Groupon aspires to be global, but the markets it serves are intensely local. Internet selling is best suited to “experience goods”. These are goods and services the quality of which you cannot judge until you experience them, such as haircuts and Thai meals, so there is no advantage in having a bricks-and-mortar shop for people to browse in. (In North America 83% of Groupon’s deals fall into this category.) The trouble with experience goods is that generally you cannot separate manufacture from delivery: you cannot cook a meal in Guangzhou and eat it in New York.
Groupon was, some may recall, the hottest company in Chicago, so of course I want the company to succeed. I've also had some experience with Internet start-ups, so watching Groupon the past couple of years has felt...familiar. In particular, I've seen what happens to companies that grow by an order of magnitude in only two years.
Another interesting tidbit, possibly related: Groupon CEO Andrew Mason said as recently as June that he wasn't getting married until after the IPO. But the Tribune's business blotter reported Monday that he and Jenny Gillespie have tied the knot.