SWOT Analysis of Groupon

adam July 30, 2017 Online Marketplace No Comments

Following is the detailed SWOT analysis of the Groupon:

Strengths

• Groupon is a well-renowned international brand that operates in more than 40 nations.

• In the daily deals industry, it has a first mover advantage. Being the largest company in its industry, it offers the consumers more than 400,000 active deals worldwide.

• It has a strong employee base with more than 10,000 employees.

• Groupon allows the users to enjoy luxury goods at an affordable price.

• It encourages local and primarily small merchants by focusing more on them.

• Groupon is diversifying into new markets to expand its business. It has also moved into the e-commerce sector to grow its sales.

• It is a financially strong company with more than 50 million active buyers.

Weaknesses

• Although Groupon established this industry, recently many new entrants have moved in and grabbed market share from it. This has meant lesser margins for Groupon on products.

• As most customers are attracted for a particular deal, there is no customer loyalty to the brand. Many may even never return if they don’t find a suitable deal.

• Many users have posted negative reviews regarding Groupon online.

• Due to decreased margins, the deals leave a minor profit for the merchants leaving them unsatisfied (Lewis, 2012).

• It has entered into the e-commerce sector but still has not launched an app facilitating its customers as other competitors have.

Opportunities

• After venturing into e-commerce, Groupon can also launch its own app for customers to facilitate their purchases of deals.

• Groupon can work on personalization to better target deals in order to attract new customers.

• It can also work on developing its long-term relations with its existing partners in order to promote return business from them.

• It can focus on increasing the variety of products and deals it offers on those products.

• It can enter into a partnership with big companies to further improve its deals.

• Groupon only operates in approximately forty countries. There is still great potential for it to step into other countries. This will help it grow.

Threats

• Many replicas of Groupon have emerged in different countries which are hoping to grab market share away from Groupon.

• As the deals offered by Groupon are non-personalized, this whole system threatens the ecosystem of the entire business model.

• Some of the highly discounted deals offered by Groupon have led to anti-competitive investigations aimed at curbing those deals.

• Most of the users are one-time. They just make a single purchase for the sake of the deal and never return.

• A number of new entrants such as PennyGrab Inc. and dealsofamerica.com have been successful in grabbing market share from Groupon (Lietuva, 2014).

• Increased competition.

• The recent economic slowdown has reduced the purchasing power of the customers. This has lead to the decrease in sales.

References

Lewis, J., 2012. Groupon SWOT Analysis. [Online] Available at: https://prezi.com/fw8zyt7rc96d/copy-of-groupon-swot-analysis/ [Accessed 26 July 2017].
Lietuva, 2014. Groupon. [Online] Available at: https://www.slideshare.net/OgLLe/groupon-30451706 [Accessed 26 July 2017].

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