Groupon - The future of distribution?

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Groupon is a deal-of-the-day website that is localised to major geographic markets including the United Kingdom and then further localised to city or even county level. Groupon has only been in the UK for a short time and already it is a significant consumer destination.

The company offers one "Groupon" per day in each of the markets it serves. The Groupon only works if a certain number of people sign up for the offer, then the deal becomes available to all; if the predetermined minimum is not met, no one gets the deal that day. This reduces risk for retailers, who can treat the coupons as quantity discounts as well as sales promotion tool with zero upfront costs

At the moment the majority of the deals available are based around the health, fitness and beauty markets but this is starting to expand into hotels. A recent deal I saw in Warwickshire was;

£76 instead of £208 for a two night stay for two people, including afternoon tea with fresh scones, conserves and a glass of bubbly in a 4 star boutique hotel - Save 63%

182 of these deals were bought within the terms determined by the hotel.

There are potential problems with the business model; for example, a successful deal could temporarily swamp a small business with too many customers, risking a possibility that customers will be unsatisfied, or that there won't be enough product to meet the demand. In January 2011, Google have announced plans for Google Offers, a competing product.  

I found the site easy to use and the consumer interface particularly engaging. Also useful to be able to search earlier completed deals. It is easy to register and easy to use.  From a hotel’s point of view, I would be interested to hear of any experiences you might have had with Groupon.

From what I can see, it is a simple effective and popular business model ideally suited to the hospitality market. How long before a similar concept is launched to corporate hotel buyers?. At the moment the deals are limited and restricted but there is no reason why hotels cannot use this distribution model to shift excess room inventory.

The Groupon UK website is http://www.groupon.co.uk

Call me on 07791 886258 if you are interested to learn more or how this model might work for you.

 


Comments (1)

Tammy Robinson
Said this on 1-26-2011 At 05:58 am
GREAT Article, Grant. I love your blog!! Groupon (and similar sites) are the way of the future
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