Groupon's Business Model Social and Local

How does Groupon take advantage of social networking and location technology?

Groupon is a global e-commerce marketplace connecting millions of subscribers with local merchants by offering activities, travel, goods and services in more than 28 countries. Groupon was launched in November 2008, and the first market for Groupon was Chicago, followed soon thereafter by Boston, New York City and Toronto. By October 2010 Groupon was available in 150 cities in North America and 100 cities in Europe, Asia and South America, and had 35 million registered users. By the end of March 2015, Groupon served more than 500 cities worldwide, nearly 48.1 million active customers and featured more than 425,000 active deals globally.

Groupon works as an assurance contract using the point platform. If a certain number of people sign up for the offer, then the deal becomes available to all. If the predetermined minimum is not met, no one gets the deal that day. This is will reduce risk for retailers, who can treat the coupon as quantity discount as well as same promotion tools. Groupon makes money by keeping approximately half the money the customers pays for the coupon. 

Social Technology:

Groupon combined two of the major new trends in e-commerce localization and social networks. Selling goods and services on the internet in increasingly based on social networking such as recommending friends. Moreover, companies targeting individuals and their friends who are member to social networking communities such as Facebook and Twitter. Other than that, it also can follow up with newsletter, special offer and new release the company. There are mobile applications for Groupon as well as for many other companies that are increasingly pitching and selling over mobile platform and e-commerce is becoming more mobile as well.

Location Technology:

As Groupon armed with detailed knowledge of customer location target special offer of location-based goods and services. Information for the selling of goods or discount of coupons can be access by customer at anytime and anywhere by using mobile applications. Moreover, the business earns revenue by asking people to recruit their friends and acquaintances to sign up to discount to create a critical mass of potential customers for a local products or services.

Do you think this business model is viable? Why or not why?

For my opinion the business model is viable due to it is an inexpensive deal and ability to get more profit.  It is because, by using social connectivity is proven as a platform to selling goods and services on the internet. Groupon also need to strategize the marketing and business in order to maintain their profits and Groupon also need to maintain and increase competitive advantage for their products and services.