Groupon: No Sustaining Competitive Advantage
Groupon (NASDAQ:GRPN) has very serious competition from well-known public companies, including all the heavy hitters listed below. In an earlier article, we noticed the average revenue per Groupon sold and the number of Groupons purchased per customer both declined.
There's a good reason those two metrics are declining, and that reason is simple -- competition. All the competitors listed below have very similar appoaches to Groupon. In some cases the user interface is indistinguishable because the Groupon interface has been copied over and over.
There's no brand loyalty in the business. It's strictly a deal-by-deal business by definition. We expect competition to further drive the price per coupon down, and also drive down the number of coupons purchased per customer.
CEO Andrew Mason is currently in China trying to gin up some extra business, but there are probably more Groupon knock-offs in China than in the United States.
The sites listed below simply demonstrate how non-differentiated the business is, and shows there are no real barriers to entry. It's gong to be brutally competitive going forward.
Compare Groupon's user interface with other well-known companies.
Google (GOOG)
Amazon (AMZN)
Microsoft (MSFT)
eBay (EBAY) daily deals
OpenTable (OPEN)
Travelzoo (TZOO)
The Knot (KNOT)
Local.com (OTC:LOCM)
Living Social
DealFind
Yelp
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Deal of the Day
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
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