We mentioned Groupon’s $1billion valuation the other day, and eConsultancy has some more thoughts on that valuation and the whole group shopping explosion.
Whilst it would appear that some believe Groupon’s valuation is cheap whilst it makes money “hand over fist”, there are also some worries that the model might not be sustainable.
Firstly from the number of competitors coming into the market and those trying to undercut them (by reducing the amount of commission they get paid from the retailer), and secondly there’s a question mark over whether shopping models such as these will generate long-term customers for the retailers (and therefore ROI).
The very nature of these sites is that they’re often spur of the moment, one off decisions, which may bring in a high volume of customers in the short term, but will they be repeat purchasers?
photo credit: Duane_Brown