Interview: Groupon Singapore, Acquired for $24 Million in <1 Year

Interview: Groupon Singapore, Acquired for $24 Million in

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The seventh and last interview in our Successful Businesses Interview Series features Groupon Singapore, the most popular deal-of-the-day website in Singapore, and part of Groupon conglomerate worldwide.

If you’ve not heard of Groupon, it’s taking the consumer market by storm. Launched only 3 years ago (2008), Groupon now serves more than 150 markets in North America and 100 markets in Europe, Asia and South America and has amassed 35 million registered users! (Wiki)

So how does Groupon work? Firstly, they negotiate with a merchant for a sizable discount on their product/service (usually 50% and above). Then, they promote the merchant’s product/service on their site Groupon.com, where consumers gets to purchase that item at that discounted price, on that day.

The deal is valid for 24 hours – When the day is over, the deal is over as well. The deal is only confirmed if a minimum number of purchases is reached. If the minimum quota is not met, the deal is called off. The consumers don’t get the deal and the merchants don’t sell anything. Hence, collective buying power is the key driving force behind Groupon’s concept (i.e. group coupon).

The next day, a new deal is promoted on Groupon’s site. The cycle then repeats.

The model works very well because (1) For the merchants, they get to (a) clear excess inventory (b) drive quick awareness of their business and quick sales (2) For the consumers (us), we get a large discount – one we’d never have gotten if we were to purchase individually. We benefit from the collective buying power. Both merchants and the consumers get value from having Groupon as the middleman.

I’ve checked out some of Groupon’s deals, and some of them are massive. Discounts are almost always 50% and above, and there is a wide coverage, from restaurant meals, spa treatments, vacation holiday packages, ice cream, concert tickets, magazine subscriptions, to even dance lessons. Each country has its own set of Groupon deals – if you live in Chicago, you’ll get access to Chicago deals, while people in Singapore get access to the Singapore deals, and so on.