Groupon Case Analysis

In: Business and Management

Submitted By JennVentura
Words 957
Pages 4
. In today’s boom or bust economy and the fast growing technology, the rapid growth of the online market is no surprise. Groupon, like sites such as Expedia and Priceline, is an “e-tailer” (Growing Pains at Groupon) in which the site acts as the “middleman” who is responsible solely on transaction of goods and services between the customer and the supplier, or referred as “merchant.” Groupon’s business model is quite simple. The merchants, goods suppliers or services providers, agree to give Groupon’s customers, the subscribers, a discounted price for their goods and services if Groupon attracts enough subscribers to be qualified for the discount deal. This business model takes the full advantage of unit of scales, which means it maximizes profits and minimizes cost if the quantity of customer increases. Typically, the sale goes through Groupon who notifies the merchants of the transaction. As the result, the merchant can provide the goods to the customers at the promised date. The revenue of the sale is split 60-40 where Groupon keeps 40% of the total revenue.
Wal-Mart’s business motto is “Everyday Low Prices,” and Wal-Mart constantly negotiates with the suppliers to fill up their gigantic inventory pools and keep up with their business motto (Weiderman). Knowing that Wal-Mart is one of the world’s biggest corporations, suppliers oftentimes find themself uneasy to reject offers from Wal-Mart to maintain a long-time customer relationship (Weiderman). Similarly, Groupon also attempts to drive down the price of goods and services for their customers directly from the merchants. These two companies in a sense play the same role as the “middleman” “connecting” goods and services from suppliers and merchants to customers in a low price.
Wal-Mart is a brick-and-mortar company, which has both structure and infrastructure including stores, warehouses and corporate…...

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