How Does Groupon Work And Make Money?

What Is Groupon? How Does Groupon Work? How Does it Make Money? There are a lot of questions people ask about Groupon.

Back in 2015, this was one of the most well-known Deal-Of-The-Day platforms. The average Groupon deal grants a 15% to 30% discount, but it can go as high as 90%. It had tens of millions of users and billions in revenue.

Fast forward to the COVID era, this was one of those platforms that were hit the hardest. Now, it took a huge loss, yes, but slowly it’s coming back.

The platform recorded 22.2 million buyers by the first quarter of 2022. As such, Customers worldwide have bought more than 1.5 billion Groupons so far.

Moreover, just last year, Groupon’s global revenue was around 967 million U.S. dollars. An average Groupon deal can attract 350 sales and generate revenue of more than $8,750

To say this platform is popular is an understatement. In 2021, there were 5.8 million downloads of the Groupon application across the globe. More than 75% of Groupon transactions in 2021 were completed on mobile devices.

This is one of the reasons why a lot of people want to create an eCommerce app like Groupon.

But to create a successful mobile application, one must first understand what Groupon is and how it works. Therefore, in this section of the blog, we shall be going through everything related to Groupon and its’ Business Model.

By the end of the blog, you will know what this platform is all about, and how you can create one of your own. With this being said, let’s get right into it:

What is Groupon?

Groupon is an E-Commerce Marketplace.

It was founded back in the year 2008. And let us tell you, when it came into the market, it wreaked havoc and took the market by storm.

ECommerce marketplace is different from others. How? Well, unlike amazon, you just don’t look for stuff and order them. Here, you can buy services, offers, activities, travel, coupons, and yes goods too.

This platform is C2C where most of the deals are offered by local merchants.

In their own language, “cash-back, online discount product and service platform that “gives your money back” when company consumers claim a deal”.

If you think this amazing, wait till you hear this: claiming a deal doesn’t cost anything. Plus, once a deal is claimed, the user can use it as many times as they want within the offer period.  Speaking of deals, while the average discount range is 15% to 30%, it can go up to 90%.

In simple words, it allows users to buy coupons and other goods & services which they can use in their local market.

Moving on, as an example of hybrid app development, it is available on both iPhone and Android devices. In addition to this, it is also accessible through the web.

In addition to this, it is available in more than 20 countries. These are, as mentioned below:

These are the places where you can use this platform in. Now, with this being said and reading all about the Groupon platform, you must be wondering how it works.

Well, we shall be discussing that in the next section of the blog.

How Does Groupon Work?

Groupons’ online marketplace is what every custom web development project takes inspiration from.

But there are a lot of people asking, how does Groupon work? As any great platform, it provides quite a simple process.

While customers are king in most cases, here, everything is 50/50. Well, there are two parts of this platform. The buyer’s side and the merchant’s side. In this section of the blog, we shall be going through both of these platforms in detail.

Therefore, with this being said, let’s first look at the customer’s side. The working process is, as mentioned below:

• Buyer’s Side

1. The first thing the user needs to do is access the platform. Now there are two ways one can do it. Either with web through a browser or download mobile app from App Store or Play Store.
2. Once the user has access to the platform, it is time to register. This can be done via basic information like email, name, location, pin code, and so on.
3. Following the registration, the user can access the entire platform; it’s as simple as that. Here, the user can look for deals, coupons, travel offers, good, and other services.
4. If the user wants to buy something, they can select the specific product and proceed with buy now.
5. The platform comes with multiple payment methods & eWallet Integration that enable safe, secure, and fast transactions.
6. Now, the user can use the coupons or avail the services as they wish to.

• Groupon Merchant Login

1. The working process for the seller is quite similar to the buyer. Thus, the first thing they need to do is access the platform. They can do it web through a browser or download mobile app from App Store or Play Store.
2. Second step is registering on the platform. Again, it can be done with the basic information and it is a quite simple & quick process.
3. Once here, the sellers can add their service to the platform.
4. After the deal is online, the buyer can start exploring and availing those services.
5. This side of the platform also allows the merchant to manage their listings.

This is the working process for both sides of the table. Let’s look at some of the features to learn more about working.

Features To Include in eCommerce App Development – Groupon-Like App

Features are the driving force of any platform. Let’s look at features that you should include in your own app like Groupon. These are, as mentioned below:

Now, in next section of the blog, we shall be looking at the Groupon business model.

Groupon Business Model: Deal-Of-The-Day E-Commerce Marketplace

Looking for a mobile app development company to create your own App Like Groupon? Well, it’s a good idea to first understand the business model of the platform.

As such, it is a multi-faced online eCommerce marketplace that allows buyers to avail coupons, travel plans, offers, and so on. On the other hand, local merchant can offer their services on the platform.

Coming to the business model of this deal-of-the-day website and mobile app, in this section of the blog, we shall be going over everything related to the same.

• Groupon Business Model Canvas

Here is a Groupon business model canvas that shows a brief overview of the model’s different components. It is, as shown below:

(Create a Similar Image Link Below

https://businessmodelanalyst.com/groupon-business-model/)

• Groupon Business Model Problems

So, there has been a lot of talk about the problems with the business model of this platform. And it goes back more than a decade.

Half a decade ago, this was one of the largest platforms with around 40 million users. But fast forward to today, and it is half of what it used to be.

Most of the market critics blame the business model of Groupon. This is the reason why despite being the industry’s first, it couldn’t reach its true potential.

Let’s look at some Groupon Business Model Problems. These are, as mentioned below:

• Innovation

ECommerce App Development’s success highly depends on Innovation and it is no secret.

However, this is something Groupon has been facing some problems with. Due to the lack of innovation, another eCommerce platform like Amazon has been leaving behind Groupon.

• Expansion

We live in the 21^st century where change happens overnight with trends and mega-trends. And if big companies like Groupon don’t adapt and exploit them, well, they are left behind.

This platform has been having issues with expansion due to its business model not being compatible with new segments.

• Research and development

Big businesses are driven by research and development. Rightfully, Groupon has invested much in this part.

Nevertheless, the platforms lack something in the formula. This is one of the big problems with the platform.

These are the problems of this platform. Moving on, we shall be looking at the customer segments of Groupon.

• Customer Segment

So, who are the customers of Groupon, how does Groupon work when it comes to this?

Well, this is an online marketplace but it is two-faced. Meaning, allows local merchants to offer their services while other users can buy them.

Therefore, there are two customer segments. These are, as mentioned below:

• Merchant
• Consumer

• Value Proposition

Every platform is judged based on its value proposition. Therefore, when you are analyzing the business model of Groupon, you need to look at its value proposition.

The value it delivers for its customer segments is, as mentioned below:

Value For Consumers :

• Better discounts on local deals
• Opportunity to explore new things
• Reduced Risk

Value For Merchants:

• Free marketing and advertising.
• Access to large user base
• Editorial assistance.
• Free Marketing
• Revenue Generation.

This is how this business model delivers value to the customer segment. Let’s look at the distribution channel of the platform in the next step.

• Distribution Channels

So, how does this platform distribute services? well, let’s look at the channels, these are, as mentioned below:

• Top Competitors

A lot of people ask, Is Groupon Profitable? Well, being profitable is something that highly depends on the competition and how the platform beats them.

That is the reason why in this section of the blog, we shall be looking at the same. These are, as mentioned below:

• Gilt City
• Scoutmob
• Yipit
• DealNews
• Woot

These are some of the top competitors of Groupon. And if you want to build a similar platform, it is a good idea to analyze the same.

How Groupon Makes Money?

So, before you go hire dedicated developers and develop the next Groupon platform, it is a good idea to learn how these platforms make money.

In order to generate revenue, marketplace or eCommerce platforms use monetization strategies. These are embedded deep within the business model.

As Groupon is an online marketplace and a deal-of-the-day platform, it has its own unique set of monetization methods.

In this section of the blog, we shall be going through these:

1) Coupons & Vouchers

It goes without saying that coupons and vouchers are the main attraction of this platform. Groupon has been marketing on the same for years.

This is the main method of how this platform makes money. With this out of the way, let’s look at another revenue stream.

2) Direct Sales

While the platform allows third-party to offer their products on the platform, it also sells its own services.

The platforms charge a commission on the former one, but the revenue generated through the latter one is all profit. Thus, it is one of the top revenue streams of the platform.

3) Commission

Like all major platforms, Groupon charges a commission on sales.

For third-party sales, the platform charges up to 50% of the commission. This is yet another top revenue generation method.

This is how Groupon platform earns money and work. And with this, we have come to the end of our blog.

Conclusion

This is the answer to how does Groupon work and how it earns money. Now, if you want to create a similar app or want to learn more about the same, it is highly recommended that you should consult an eCommerce app development company that will help you with the same.

Niketan Sharma

Niketan Sharma is the CTO of Nimble AppGenie, a prominent website and mobile app development company in the USA that is delivering excellence with a commitment to boosting business growth & maximizing customer satisfaction. He is a highly motivated individual who helps SMEs and startups grow in this dynamic market with the latest technology and innovation.