Tuesday, December 18, 2012

Is Google In Need of Groupon coupon?

Chicago-based Groupon (GRPN-$5.01) remains a coupon-driven business, just one of many available to online shoppers. Further, a growing number of analytical and survey-based studies report disillusionment with the alleged effectiveness of coupon promotions. In particular, merchants are questioning the long-term profitability of daily coupon ventures, as a low percentage of customers spend beyond the deal value (with even fewer returning for full-price purchases). Evidence is surfacing, too, that shoppers drive up store congestion by waiting until expiry to use their coupons, which negatively affects perceptions of the participating vendors.
Groupon management says that it is addressing such concerns and is working more closely with its merchants to (a) improve profitability (such as, its new mobile payment app, called “Payments,” which will offer more competitive swipe-fees than the 2% - 4% transaction costs associated with traditional charge cards) and (b) design online promotional offerings that increase percentage of coupon redeemers into loyal customers.

Editor David J Phillips does not hold a financial interest in any stocks mentioned in this article. The 10Q Detective has a Full Disclosure Policy.

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