Groupon: No Sustaining Competitive Advantage

Jun. 10, 2011 9:10 AM ETGroupon, Inc. (GRPN)14 Comments
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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) (OTC:LOCM)


Living Social



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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

This article was written by

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During the IPO season Francis Gaskins, editor of & director of research for, regularly appears on CNBC TV, Bloomberg, & other financial cable channels. On the day of the Visa IPO he appeared on four cable TV financial shows including Bloomberg & CNBC. Over the past five years he has been quoted over 500 times by such financial media as the Wall Street Journal, Bloomberg, Reuters, Associated Press, USA Today among others. Those quotes are available at His varied personal interests include violin playing. For example, he is concertmaster of the Palisades Symphony. He also holds an MBA from Harvard Business School (finance) and an AB from Princeton University (economics).

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