Technology of the Week: Electronic Markets and Auctions – Groupon vs. Google Offers

The existence of market places has taken its place in human society for as long as can be remembered. With the emergence of the Internet, its growing user base and the development of information technology electronic markets were created over time. Parallel to the rise of electronic markets, the digital coupon industry started growing which resulted in the evolution of the so-called “e-coupons” (Jung & Lee, 2010). Consequently, “Daily Deal” websites emerged, rising greatly in popularity due to its advantages of being an e-market. Groupon and Google Offers are two web services that operate in this market.

Groupon is a company that launched in 2008 and is now one of the most commonly-used, group-buying website that started off with offering daily deals regarding restaurants, beauty and wellness, shopping services and tickets all over the world. These offers were available for a limited amount of time and (sometimes) quantity.

Google Offers is a web service launched in 2011 that offers local deals of the day that were only valid for a specific amount of time. Additionally, Google Offers was imbedded in Google Maps, Places using Google Wallet as payment service.

Comparison

Looking at both companies’ business models, various similarities concerning customer segments, value proposition, channels and revenue model were detected. However a disadvantage is that Google’s focus is not as singularly as Groupon is. By analyzing the SWOT of each company it can be concluded that both firms are adding value by applying the couponing technology to their platforms, offering the same kind of deals. Differences can be found in the extra services or information the firms provide through their website. Through Groupon more local cities are available, it allows users to set a certain distance range and one can see what other consumers are doing, also known as observational learning (Chen, 2011). In contrast to Groupon, a deal from Google Offers is valid regardless of how many people take it. Furthermore Google Offers is beneficial toward both merchants and customers, where Groupon is only lenient toward some consumers (Blodget, 2011; Moon, 2013).  Hereby, Googled Offers could expand its user base by incorporating Maps, Wallet and Places  which made the initial registration for Google Offers easier because of its link to other Google service, whereas Groupon used their social media platforms. Nevertheless, a combination of Groupon leading in market share, their customized services and focus proved to be too much to compete with. Google Offers choose to forfeit the market and abandoned the Google Offers project in the first quarter of 2014.

Future predictions

Rivalry among existing competitors is high in the electronic couponing market. Only through constant innovation, new services and aggressive marketing strategies will firms be able to compete within the industry. New technologies will allow even greater customization towards consumers, automated sales to companies and self-serve solutions that are necessary to stay ahead in this highly competitive environment.

Group 27:

Alje Dijkema (437581)

David Grabner (441485)

Dominique de Knecht (348165)

Alicia Kong (371764)

Victoria Blei (376328)

References:

Blodget, H. (2011) Google Offers Revealed: Here Are The Secret Details About Google’s Groupon-Killer, Available from http://www.businessinsider.com.au/google-offers-kill-groupon-2011-6 [Accessed: September 25, 2015]

Chen, Y., Wang, Q. and Xie, J. (2011), “Online Social Interactions: A Natural Experiment on Word of Mouth Versus Observational Learning”, Journal of Marketing Research, Vol. XLVIII April: pp. 238-254

Jung, K., & Lee, B. Y. (2010), “Online vs. offline coupon redemption behaviors”, The International Business & Economics Research Journal, 9 (12): pp. 23–36.

Moon, M. (2013) Google Offers now lets you clip coupons without paying in advance, Available from http://www.engadget.com/2013/09/25/google-offers-refund/ [Accessed: September 25, 2015]