Why Groupon has Legs

With Facebook Deals and Google Offers launching the exact same service as Groupon (and have been tagged “Groupon Killers“), pundits are questioning Groupon’s sustainability and market share. Deals have become commodities, and Groupon will certainly lose market share simply due to the growing volume of deals being distributed by a wider array of publishers. So how does Groupon differentiate their deals from Facebook, Google or other mass media?

Simply put, Groupon is becoming a consumer brand, not a social network or search engine that offers deals as another revenue play. Its main asset is its compelling and generally beneficent position as a consumer savings portal. Groupon can sustain the power of this branding by continually offering new ways to save money, and bringing in new corporate partners and publishers to share in and expand its consumer distribution pipeline. Note that although Facebook and Google can do the same things, it is Groupon’s cachet as a consumer brand that is the tappable asset.

Here are a few example opportunities Groupon might capitalize on in the future.

Credit card / banking partnerships to data mine deal opportunities

Financial institutions will seek partnerships with Groupon to create opt-in deals systems based on analyzing consumer purchase history. For example, Groupon could work with American Express to data mine credit card data (by consumer permission), and customize offers based on confirmed personal needs. Consumers loyal to Applebees, Home Depot, Hilton and American Airlines may receive targeted deals to switch from Olive Garden, Lowes, Sheraton and Jet Blue. The consumer will accept the concept of leveraging personal purchase profiles in order to save money and will give rise to social consumption, the sharing of purchase history. Blippy is already an example of the sharing of personal consumption data.

Real time mobile deals platforms

Groupon and Living Social have already started paving the way to real time services with instant deal services that alert consumers to same day nearby deals based on their location. These deal discovery services, as well as check-in deals like those offered by Foursquare, Yelp and Facebook Places, will change consumer buying behavior en masse by making deals ubiquitous wherever one is. Purchase decisions – where to eat, what to do, where to buy – become more logistical and will require less planning.

Real time inventory liquidation

Groupon can develop relationships with industries dealing with perishable product – airlines, hotel, cruises, car rental, events producers, theaters – to create real time inventory clearance systems. These systems would optimize inventory control as well as provide consumer last minute bargains. See my March 19 article on real time inventory systems.

Expand consumer brand to other consumer categories

As a consumer brand, Groupon can expand its product categories to daily life products like groceries, nutritional supplements, drug store items, and hardware. Like Amazon and Priceline, Groupon can carve a consumer niche by providing deals across a full spectrum of products, and become established as a one stop shop.

About Pat Kitano

Patrick Kitano works with brands in developing hyperlocal engagement solutions and is administrator of the Breaking News Network, a national hyperlocal network devoted to community service. He is the author of The Local Network on Street Fight, and is reachable via Twitter @pkitano and email pkitano@gmail.com.