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e-Business Model and Strategy Business
Group 11 BEN MOHAMED Salim HUMBLET Michael OLIVEIRA Pedro OTERO TORRES Pablo PEREZ CARPIO Borja RADZKI Przemyslaw Pavel RIFAYI Melaz VERSTRAETEN Eloy VULFS Raphael
Academic year 2010/2011
If the minimum number of purchases is reached. deep linking. e) Security functionalities Groupon takes security seriously and take numerous precautions to protect the security of Personally Identifiable Information. linking. festivals and music concerts. The information about theses events are naturally available on the website. distributing. Any violation of this policy may lead to a copyright. the costumers send the offer to their friends. The success of Groupon. concerning its communication. The costumers can also follow the group on the various websites of social networks such as Twitter and Facebook. Inc. or used with express permission of the copyright and/or trademark owner. The offer shows a product with a discount from 50 to 90%. This password is encrypted. In order to get the product they want to purchase. the buyers also can get acquainted with the method of payment. we will not find any links to other similar companies. In addition.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 1. d) Copyright functionalities Everything located on the website is the exclusive property of Groupon. the price after the discount. That’s why the company doesn’t want to promote others websites. or otherwise modifying of the site without the express written permission of Groupon. They can pay with their credit cards and security is guaranteed. b) Commercial functionalities Groupon displays an offer of products a day in each market it serves. Key Functionalities a) Communication functionalities On the website of Groupon. Personally Identifiable Information on the customers resides on a secure server that only selected 2 . The offer is posted on the website of Groupon and is send by e-mail to all the members who have registered on this site. transmitting. operas. On the website. A major drawback of the website is the fact that it is easy to imitate. no one gets the product. theatres. is directly associated with its business. In North America. the discount offered by the supplier. all buyers who have emerged get the product. the costumers can find and buy all kind of tickets which give them access to different cinemas. Inc. there are 200 sites similar to Groupon some copying the look of its site. any coping. trademark or other intellectual property right infringement that would expose the User to civil and/or criminal penalties. posting. is strictly prohibited. font and logo. its regular price. c) Cultural functionalities On the website of Groupon. if the minimum is not reached. That way the costumers promote indirectly the website of Groupon. To buy something on the website a certain number of people has to sign up for the offer which is presented on the website. Consequently. The offer states: a detailed description of the product which is offered. The customers can access their Personally Identifiable Information on the Website through a password and their email address. saving realised on the product and the minimum number of products which has to be purchased so that that deal could be concluded.
Groupon sales personnel then approach local businesses and try to establish partnership with the local business. GiltCity. in Sharepost. it guarantees revenue and large number of new customers for local businesses. ideeli. Market shares Support team More than 3100 employees. Google offers. Facebook Deals. adresse URL: http://www. consequently. Woot!. The target group1 Groupon offers a « Deal of the Day » in each of the 300 local markets. Coupons. They encrypt certain sensitive information (such as credit card information) using Secure Socket Layer (SSL) technology to ensure that Personally Identifiable Information is safe. NEXTUP. Over 50M total subscribers across over 300 cities in more than 40 countries. Yelp. Number of subscribers Number of active users Competitors LivingSocial.2M in 2010. 3.2M unique visitors a month in the US in 2010.scribd.com/doc/48117058/Sharespost-Groupon-Research-Report (page viewed the 20th of March 2011) 1 3 . The key business characteristics Revenue Over $ 600M in 2010. Estimated 60% of Local Deals Market. estimated $920M in revenue in 2011.com. 2. Cheaptoday. Number of unique visitors per month Nearly 11. Groupon enters new markets by looking for the local market and identifying successful local businesses. Groupon offers considerable savings to consumers (up to 70%) who can then discover services/product they didn’t know. Kupikupon. Nextup Research Report. Groupon’s business key success has been its strong partnership that it creates with local businesses. Estimated 11.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 personnel and contractors have access to.
Consumers subscribe with Groupon and receive deals through emails. 4. and establish partnership with the local business. Groupon pays the local businesses after taking a 40%-50% share of the revenue generated by the deal. Groupon performs research of the local market and identifies the successful local businesses.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 Groupon is best suited for high fixed cost businesses and business where the customer acquisition cost is very high. Consumers pay Groupon by purchasing the deal. Consumers then redeem coupons with local businesses and receive discounts. The deal is generally available for a few days and the deal becomes inactive if the critical subscription is not reached. When a minimum number of users subscribe to the deal. Business model Groupon’s business model is easy to copy. the deal becomes active. Consumers can also see deals in the Groupon website. barriers to entry for the local deal market and switching costs for consumers and local businesses are low. There are about 500 firms worldwide (200 firms in US alone) which have started to emulate Groupon’s success. Groupon features deals involving products/services offered by local businesses in some selected locales based on the target consumer base. Groupon is also best suited for businesses thriving on repeat customers such as spas and restaurants. Groupon sales personnel approach local businesses with outstanding reviews. Source: Company Reports & Primitus 4 .
The four pillars of the business model a) Product innovation Groupon doesn’t distinguish itself from competitors by its products but rather by the manner with which it sells its products and services. ordinary people but also companies for example. In addition. All types of products and services are thus sold by Groupon. Trust & Loyalty: Given the deals offered by the site. Groupon has expanded its offer. Groupon’s reputation has grown rapidly. making unrealistic promises (false advertising). Key Partners: The Point platform (even though now Groupon acts independently) Key Activities: Offers discounts on various products and services from other companies Key Resources: Physical: Internet. 5 . Groupon is a platform offering promotional geo located products and services. Here. and the economic concept surrounding its creation. hence the offer more focused on health and beauty. Target customer: Originally Groupon had young women as main target. advertising outside of the site is also aggressive. Business model canvas The features of Groupon’s ebusiness canvas will be dealt with extensively in the following sections. Groupon committed to providing a "good deal" by city and by day. In addition to that. Thus its business model intends to reach as much people as possible. Value proposition: The big advantage is that Groupon only makes promotional offers for which the price decreases from 50 to 90% overall. servers . Indeed. b) Customer relationship Information strategy: The platform provides no information unless you gave your e-mail address: it's an aggressive recruiting strategy. we just offer some key information. Capabilities: The Groupon system has no limits: it does not need space to store goods and deals may be concluded with suppliers of all types of products and services.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 5. Feel & Serve: Groupon run its activities and offers its services only through its website. The word Groupon is now a familiar name associated to “cuts” or “good deals”. mails to customers Customer Segments: Mass Market Cost Structure: Point-of-sale structure through the internet Revenues Streams: If enough customers enter into a deal 6. Intellectual: brand name Value Propositions (Offer): Promotes products or services with significantly discounted prices Customer Relationships: Self-Service : customers has the liberty to choose the product or service that suits his needs Channels: Website. However. Indeed. the frequency of of the offers makes the site very attractive.
the site has more than 50M total subscribers in more the 40 countries worldwide. Their promotional texts contribute to the popularity of the site. a commission of 30% (on deals promoted by Groupon) or 10% (on deals promoted by the merchants themselves) is charged by Groupon. Besides. Nowadays. The commissions depend on the discounted deal prices and the deal categories of the offers.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 c) Infrastructure Management Activity configuration: Groupon firstly sends employees to research the local market and find a business with outstanding reviews. Ownership of the resources Relationship Data Transaction • • • • • Groupon The businesses Groupon The businesses Groupon 6 . Profit Model: Since the system of commission represents the major part of the incomes of Groupon. Groupon has developed an e-commerce platform: Groupon Store. Nevertheless. Groupon can reach this objective by increasing the number of subscribers and the numbers of partnerships with small businesses by exploring new markets such as China. Then. Partner network: The number of subscribers has continuously increased since the creation of the website. In 2009. Cost structure: The costs consist mainly in the exploration of business with outstanding reviews and the promotional costs. 7. A new offer can be started for free. Resources: The main resources of Groupon are its 3100 employees and the computers and the locals and its reputation. the company’s growth depends essentially on the number of deals. when a deal is reached. the company uses social marketing sites such as Facebook and Twitter. Financials Revenue Model: Groupon earnings come by keeping approximately half the money the person pays for the coupon. but also promotes through applications on iPhone and Android-based mobiles to promote the idea. the company has developed partnerships with several companies in order to provide a range of services to the merchants who choose to advertise Groupon Deals such as “TransNational” (payment processing) and “Speakeasy” (voice and data communications). The revenues in 2010 were $600M and the estimated revenue in 2010 will achieve $920M.
Diagram of the information. In this way.groupon. special discounts Customers money.com 7 . products and value streams Goupon Groupon vouchers. The partners and the allies The first Partner Groupon needed was the platform The Point from where it expanded. or not. Groupon couldn’t live without other partners and allies that are the merchants contracting with them and the subscribers being the customers. The supplementors are the competitors that are copying on Groupon’s business model and developing the same business. personal data’s Groupon data about the customers.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 8.”2 Secondly. Together. money The businesses data about products. the groupon and the deal goes through if the minimum has been sold at the end time. 2 Website: www. but only once a "tipping point" of people agree to participate. Daily subscribers will buy. services and prices Customers Businesses products and services Customers vouchers’ Businesses 9. “It’s a website that lets you start a campaign asking people to do something as a group. the supplier and Groupon agree on a win-win deal where the price will be lowered according to a minimum quantity sold. The company Groupon takes 50% of the final price and the customer is delivered through the supplier if necessary. the companies contracting with Groupon are the first complementors and the ones being in contact with the clients.
Overview of Groupon’s e-Business strategy a) Value proposition Groupon promises to lower market product prices from 50 to 90%. That way. but rather luxury products. new businesses products that need to be known. 8 . the contracted deal is only executed if the minimum quantity is met. distributing the final price equally between the company Groupon and the product supplier.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 10. the supplier is able to calculate a potential benefit out of the deal. c) Market segments The following graphs offer statistics regarding the subscribers: they are mostly young single women that are educated and work for good revenues. the products sold are not basis products where the margin is low. b) The added value of the online business The added value that is brought by the company is mostly the security. discounts and packages. Therefore. Indeed.
e) Activities to perform Groupon needs to reach its subscribers and attract new ones in order to raise a minimum amount of customers interested in the same product. On the other hand.. Groupon is looking for companies that are willing to be known and to expand or the ones willing to develop internationally. Groupon started its business thanks to the platform The Point as launcher of websites that allow 9 . etc. The delivery is executed by and in charge of the supplier. but moreover. f) Resources. the businesses are contacting Groupon to work with the company and are helped to clinch a deal. buying through Internet is a new way to make his shopping. Indeed. technology. Simultaneously. the channels used to reach the clients are characterized by both a substitution effect and an extension effect. d) Channels On the first hand.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 On the other side. the Groupon offers allow discounts and less travelling. it needs to perform well in order to have recognition and respect from contracting companies and attract new ones.
. g) Partners The partners. and eWinWin. Ideeli. Among them. being essentially the companies co-contracting. i) Revenue sources From the price charged to the subscribers for the voucher. S.”4 k) Conclusion In order to conclude. However Groupon was a side project of The Point at the beginning. Ideeli. 2010. Jasmere. Coupons..edu/research/pdf/11-063. half of it is returned to the company Groupon. Lots of other companies have also worked with Groupon and most of them are quite satisfied with the services of Groupon even though there are more and more studies that nuance this affirmation3.com. Cost structure EDELMAN. are very diversified going from the cloths brand GAP to the events NHL and NBA and the digital payment platform MASTERCARD. Groupon is the largest player in the emerging local deals market with more than 60% of the shares.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 gathering people searching for the same project or product. in Harvard Business School. Groupon has created the “Groupon Merchant Partner program that guarantees businesses a certain number of voucher slots per year if they agree not to work with Groupon competitors.pdf (viewed the 3rd of April 2011) 4 Deatsch. h) Competitor The business model of the company Groupon is a weak point for the company since it can be easily copied. it is now independent. j) Pricing strategy Groupon has as strategy. We note that there is a significant competition from LivingSocial that has raised funds and is likely to expand. Therefore. TownHog.hbs. BuyWithMe. K. The other players are LivingSocial. February 2011. Groop Swoop. Interenter Retailer. in order to dismiss the rivals. Groupon launches features to keep merchants happy and away from rivals. many companies are using the Groupon model to launch a business. BuyWithMe and Yelp. B. To Groupon or Not to Groupon: The Profitability of Deep Discounts. & JAFFE. & DUKE KOMINERS. the heaviest competitor is LivingSocial followed by Coupons. The company has more than 50 million subscribers spread in 300 cities worldwide. Yelp. S. 3 10 . to reduce the market price at least by half in order to attract the customers on the different groupons. adresse URL: http://www. 11. Moreover.
supermarkets. but I think it is instructive to disaggregate that market a little bit and see just who is using Groupon. Now their business model is based on simplicity. bars and grills. It has been written that Groupon has cracked the local problem – and that all of the $100B per year or more that is spent locally is open to them. Perhaps. the cost of ramping up ahead of revenue etc…) – for a total of $250M in EBITDA. You can imagine that the margins on cupcakes are very high. electronics chains. etc… What you realize looking at the list is that most of these businesses operate in extremely competitive environments with margins that are razor thin at best. Car dealers are in no position to use Groupon – nor are clothing stores. 2. I am offering a 50% discount generally – and Groupon is taking 50% of the offer price – so in essence. my net is 25% of the retail price. The overhead is completely fixed and you are paying the workers to be there – so incremental margins are high. Businesses willing to spend money to acquire users. If you take a look at the revenues of typical local advertisers it consists of car dealers. My guess is that Groupon is doing $1B in revenue – $500M in Cost of Good Sold. The question is. Since most of the Groupon employees are either sellers or administrative people doing the “paper work” for the deals. Now let’s look at the local advertising market. So Google offers $6B for $250M in EBITDA – 24X which seems like a large number – but if EBITDA is scalable and growing extremely fast (over 100% per year right now) – then the 24X becomes 12X in a year and 6X in 2 years – which seems like a pretty good deal for Google – and is probably one of the reasons why Groupon decided to remain private. perishable inventory and incremental capacity. The issue with these costs are that you have to know very well what the lifetime value of the customer is in order to price these properly. If you look at a typical media company at scale – they tend to run about 20% of sales as costs (incremental margins on the extra $ of revenue is over 80% often) – so on $1B of revenue you have $200M of costs. electronics chains. who can afford to offer 75% off on a regular basis? The answer falls into two buckets: 1. As a store owner – if I choose to use Groupon. retail stores. supermarkets etc… The margins for these businesses are too low – and they already spend a lot of marketing dollars branding themselves. 11 . you also have to believe that Groupon will continue to take an increasing share of the local advertising market – particularly the promotional budgets and marketing budgets of the local advertisers.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 Groupon has about $1B in revenue. They pay out 50% of that to their partners who offer the discounts – and the remainder of the company cost is in sales. $200M in SGA and perhaps another $50M in miscellaneous costs (real estate – exec salaries. Companies looking to lose money in order to convert customers into regular paying customers. there is thus not a mass of cutting-edge technology required nor tremendous database necessities or server needs – one can assume that the cost structure is not going to get too far beyond the SGA line. Say you own a spa. Companies with extremely fixed costs. high marginal profit levels. Now in order to reach that conclusion. chain restaurants. In most media businesses this is called SAC (subscriber acquisition costs) or CPGA (cost per gross add).
ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 The Cost (Loss-making) Mechanics of Groupon Promotions cost money. This results in many new entrants. The threat of the entry of new competitors Profitable markets that yield high returns will attract new firms. If they partner with Groupon. This model is based on the principle that a corporate strategy should take into account the opportunities and threats in the external environment that the organization operates in. Google prepares a new product to help potential customers find big deals in the area where they live. It offers the deal of the day. and if it meets the number of 12 . Sale price of Promoted Product: $8 ($16 Sunday brunch on sale for $8 through Groupon) Product costs: • • • • • • • • Raw Materials Labor Packaging Promotional expenses Insurance Rent Utilities Delivery One way of pricing this is to take all the costs into consideration and apportion them to the overall sales of the promoted product within the portfolio. But. the abnormal profit rate will fall towards zero. sending a daily email". In the online world. which eventually will decrease profitability for all firms in the industry. Google Offers follows the same mechanics that the two main representatives of the segment. Groupon and LivingSocial. what if a promotion does not provide any significant benefit? A good example is businesses teaming up with popular coupon sites like Groupon or Living Social to drive store traffic via discount coupons. Here’s what a business should consider before going with Groupon: Let’s assume that the business in question – a restaurant – offers a Sunday brunch for $16. the deal would have to be priced at $8. if the product is a buffet lunch. Unless the entry of new firms can be blocked by incumbents. this principle does apply even though in a slightly different way. It goes without saying that a business engages in promotions if it provides some significant long-term benefit. Entry of larger players such as Facebook (Facebook Deals) and Google (Google Offers) could also pose significant competition to Groupon in the future. The competitive strategy should be based on a strong understanding of the industry structure and how it may possibly change. So. 12. Michael Porter’s five forces model Michael Porter’s 5 competitive forces model is the basis of modern business strategy. you have to allocate the costs of all the above to determine profitability.
Coupons. review. there are over 500 similar sites including over 200 in US. form groups. Users can save money by using options such as printable coupons. it is specific and can enjoy the discount. Coupons: Founded in 1998. Yelp: Launched in October 2004 by former employees of PayPal. dwarfing the other players. LivingSocial offers deals in more than 127 markets and four countries. LivingSocial is a strong number two in the local deals market after Groupon. with more than 60% share.com is the largest printable coupon Website on the Internet. LivingSocial's social applications enable more than 85M users to catalog. The intensity of competitive rivalry For most industries. Worldwide. and in some regional markets.6B in 2010 up from $22. an even bigger player than Groupon. Save to card offers and local coupons. The company has more than over 50M total subscribers and offers deals in more than 300 cities worldwide. Moreover. Groupon could also face competition from players in the local review & search space such as Yelp. the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. Groupon is the largest player in the emerging local deals market. Groupon faces competition from LivingSocial which is rapidly expanding to all cities in which Groupon is offering deals. which has started offering deals.4B in 2009. Yelp also offers its users social networking features such as the ability for users to add friends. Yelp is a local review website where users can write and read reviews on various categories. in our estimate. The threat of substitute products or services 13 . Coupons is a leader in interactive coupon solutions. LivingSocial: Founded in 2007. LivingSocial is a social discovery and cataloging network that connects users with their interests. We estimate that the US Online spending (on which local deals market is dependent) is likely to edge up to $23. The Company's marketing technology solutions have helped top brands and retailers reach consumers on thousands of Web sites with alternatives to offline-delivered coupons. Groupon rejected the offer and is instead preparing to launch an IPO (Initial Public Offering) worth $ 15 billion. providing clients with a solution to coupon based promotions and consumer services. in December 2010 LivingSocial has been the most serious competitor. participate in discussion forums. Coupon Codes are available for diverse product categories.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 people who accepted the offer. share and buy their favorite items. arrange and conduct events. Google tried to buy Groupon by $ 6 billion to strengthen its local advertising business.
Groupon´s provider market is formed by a huge amount of companies that work in different markets. Groupon suppliers market is dominated by numerous companies (services. which also affects the customer's sensitivity to price changes. There exist in the global market many competitors that develop offers so similar to Groupon products. or. 14 . so they are less sensible to the price changes. components. products…ets) and is much less concentrated than the industry it sells. The bargaining power of suppliers is also described as the market of inputs. because there are millions of Groupon customers in the world that only buy a small quantity of offers. It is also a highly diversified market and there are no labor unions between suppliers making this group less powerful at negotiating time. this feature facilitates the search for substitute to Groupon and supplier switch. that want to make Corporate Social Responsibility. and services (such as expertise) to the firm can be a source of power over the firm. as it is mentioned in the last paragraph (Coupon.g.S. e. The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure.. Moreover. may charge excessively high prices for unique resources. when there are few substitutes. Suppliers may refuse to work with the firm. In this case. the products bought by customers are not an important part of their expenditures. Green Box Top was born in August 2010 and it allocates part of the profits made by selling the coupons or offers a social cause. We can say that a group of customers is powerful when it buys a large volume of products. LivingSocial. This proposal called Green Box Top. Finally Groupon only sells his products (offers) when a fixed number of customers is going to buy it. As a conclusion it is clear that Groupon customers don’t have a big negotiation power. labor. The companies wishing to participate in these promotions will have to answer "The Green Story” criterion. Also we can mention that the buyers groups are not concentrated. The bargaining power of suppliers. Yelp…and many others). The latest initiative related by the webs sites in the U. Suppliers of raw materials. This is not the case with Groupon. it means that Groupon can remove the offers if there is not the minimum number of buyers. we can conclude that Groupon´s suppliers are not a powerful group as customers are.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 The existence of products outside of realm of the common product boundaries increases the propensity of customers to switch to alternatives. From the fact that Groupon´s providers can be changed anytime.
com/learn http://www. October 22.. S.allfacebook.groupon.com/company/groupon http://www.wikipedia. December 17. 2010 The economist. 2010 CNN. & JAFFE. Groupon Moves Into TV Land. October 26. Los Angels Times. August 19. 2010.crunchbase. January 2. 2010 CNBC. 2010 Chicago Magazine.businessinsider. Groupon And The Clone Wars. Groupon launches features to keep merchants happy and away from rivals. September 16.com/company/groupon/statistics 15 . 2011 EDELMAN. in Harvard Business School.com/developers/single/groupon/8878/c http://www. February 2011. August 2010 Inc.linkedin. Videos CBS News. & DUKE KOMINERS. To Groupon or Not to Groupon: The Profitability of Deep Discounts. B. S. 2010 Deatsch..com/ http://www. . 2010 The Wall Street Journal. Aug 20. 2010 NEXTUP. Andrew Mason. August 12. Groupon: Fastest Growing Company Ever?.org/wiki/Groupon http://www. Groupon Goes National With Gap Deal. 2010 The Wall Street Journal.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 13. Man tries living on coupons for a year. August 30. Of bits and bites. 2010 Webography http://en. 'Daily deals' sites turn discounts into a social media phenomenon. On Groupon and its founder. August 16.com/blackboard/groupon Statistics http://statistics.grouponworks. Surprising Ways to Save Money. August 4. Nextup Research Report. Meet the Fastest Growing Company Ever. Interenter Retailer. Detailed bibliography Articles Forbes Magazine. Does Deals With Top Chefs. K.
00 $0.048.00% $20.52 Total Long Term Profit ROI $13.77% CALCULATION BREAKDOWN (FYI) Cost of Investment COGS COGS for ticket beyond certificate amount COGS lifelong purchase cost Brand Damage Cost $10.00 $0.616. expressed as a % of total certificates sold? How much will a typical customer spend with you over their lifetime (or year/month.00% 1.225 What is the average amount a customer spends on a purchase using the certificate? Certificate Average Ticket (A) What % of the certificates do you expect to be redeemed? How many certificates do you expect to sell? How many new. revenue effects tied to brand value and purchases with certificate) ROI over the "Long Time" Period Campaign Profit $1.18 $0.00 68.500.00 $10. etc) What other financial impact will the promotion have on your brand .48 $0.00 50.ICHEC Jean-Dominique Seroen eBusiness assignment 2 3rd of April 2010 Group 11 14.67 $5.positively or negatively? Redeemed Ticket % (R) Total Sold (T) New Patron % (N) New Patron Long Time Income (L) Brand Value (V) RESULTS 75.33 130. recurrning customers do you expect to attract from the campaign.00 $18.00 16 .00 $0.125.00% Margin (M) 230.00 Profit from purchases w/ certificate Long term Profits (includes growth of customer base.076.883.00% $20.375.568.00 Income from Investment Initial Offer Income Income from sells beyond Certificate Offer Amount New Patron Long Time Income Brand Benefit Income $24.00 $5. you have a 200% margin ($30$10)/$10 Factor Offer Amount (O) Sell Amount (S) GroupOn's Cut (G) Value $20.00 $6. Appendix APPENDIX A: Example of the ROI and profits on the operations of Groupon Description What is the face value of the certificate? How much will someone spend to buy the certificate? What % of paid money will GroupOn get? What is your normal margin? If a $30 purchase costs you $10.
ICHEC Jean-Dominique Seroen APPENDIX B: Company Timeline eBusiness assignment 2 3rd of April 2010 Group 11 17 .
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