Groupon: deal or no deal?


Age of austerity or not, students have always felt the pinch. With college accommodation eating up your maintenance loan before term’s even started, it’s difficult to enjoy the odd post-essay treat worth much more than a Moo-Moo’s. And even then, you still don’t cough up for a large.

Online discounts website Groupon think that they have the answer. Businesses advertise coupons on their site offering a big saving (between 50 and 90 percent) on their wares, be it a hotel suite, a hot air balloon ride or even a holiday. Coupons must be purchased in advance and are only up for grabs for 24 hours. In addition to this, a certain number of coupons have to be sold before the deal becomes valid.

Using the site is very simple. You create an account in which your purchased coupons ready for redeeming. Groupon allows you to choose between local and national deals. The local deals, unfortunately, are not that local as far as students with limited access to a car are concerned. It took me at least a week of waiting before a deal came up which I could reach by bike. I also had to turn down a day in a vertical air tunnel because it was in Milton Keynes.

In fairness, there were several mail order deals but these tended to be underwhelming and primarily aimed at the middle-aged female market (the traditional market when it comes to vouchers): pillows, kitchenware, a pair of weightloss hotpants. On top of this, the extortionate P&P charges certainly took the gloss off most of the offers. Even the hotpants.

Each offer page includes a timer counting downwards towards midnight when the deal ends and a running tally of the number of coupons sold with an expectant “Deal is on” tickbox poised to let you know when the threshold is reached. This drums up as much drama as internet shopping can, giving you a limited time to decide with the weight of missing out playing on your mind. Deal or no deal?  When I bought my coupon, a dinner for two at the Red Lion no less, I was devastated to find that waiting another 24 hours would have given me the chance to buy a remote controlled hover-shark instead of gastro pub grub. We live and learn.

Unfortunately for Groupon, these twin pressures are undermined by the fact that deals often run for several days on the trot with the counter restarting at midnight. The discounts themselves are very good with 60% percent off being about average. The range of offers, however, leaves something to be desired. Leaning towards the health and beauty section with massages, spas and adult braces featuring heavily, a peek at their previous deals does, however, show some desirable products – a Samsung laptop, Ocado shopping and Body Shop toiletries – but these brands are not available consistently enough to merit checking back everyday.

It may be this inability to attract big names that has hindered Groupon living up to expectations. In August 2010, Forbes gave it the mantle of the “fastest growing company ever” and Howard Schultz, CEO of Starbucks, claimed “I candidly haven’t witnessed anything quite like this. They have cracked the code.”

Groupon CEO Andrew Mason even turned down a $6bn offer from Google in December 2010 with investors valuing the business at $20bn.

One year on and the proposed share price for Groupon’s imminent flotation values the company at just $10.8bn. At $16 to $18 a share, Mason’s personal stock is only worth $844m, losing him his place in the paper billionaires club.

Groupon have got a lot right and the site is certainly worth the odd peek. They’re offering huge discounts in the straightforward, clean-cut way that the digital age allows. They have certainly gone a long way to rebranding coupons from housewives snipping up magazines to digital discounts for anything and everything available at the touch of a button. For the moment at least, the breadth of offers is what lets them down and the narrow, predominantly middle-aged female demographic is exactly who their offers will appeal to most. With network providers such as O2 and new voucher sites such as Wowcher muscling in on Groupon’s territory, breaking away from this cluttered niche is probably the way to go.

Dom Gilchrist



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