The craziest internet company in history
It took Twitter three years to reach a valuation of US$1 billion, even the famous Facebook took two years to reach a valuation of US$1 billion, and Groupon, which was founded in November 2008, only took one and a half years, which is history. The craziest internet company. On April 19, a consortium led by Russian investment company DST invested US$135 million in the company, bringing Groupon's valuation to a record US$1.35 billion.
The success of Groupon quickly triggered a craze for group buying websites around the world. Domestic group buying websites that followed the trend are also emerging one after another. Since Meituan.com was launched on March 4 this year, within 3 months, F Group, Tuanbao, LaShou, 24 Coupon, Full House, Wowo, Mantang.com, 5151 Group Buying Network, etc. have all come online. According to statistics from Analysys International, there are currently as many as 300 to 400 group buying websites in China.
The main reason why Groupon has received such a good valuation is its simple business model and extremely considerable cash flow. Groupon is a limited-time group buying website. It selects a product to sell at a deep discount every day, attracts enough buyers to make group purchases, and then collects 30%-50% of the transaction commission from the supplier in return. Only when the number of people buying in a group reaches a certain number can the group purchase be successful and enjoy discounts. After purchasing services online, customers can use printed coupons or text messages to make purchases at merchants.
Unlike previous Internet darlings who burned money like crazy, Groupon was a company that was profitable almost from the start. Groupon achieved breakeven in just 7 months, with profit margins as high as 30%. Its current weekly net profit reaches or exceeds US$1 million, and its annual revenue in 2010 is expected to reach US$350 million.
Unique online group buying model
Of course, widespread popularity among consumers is the foundation of Groupon's success. Only with the support of consumers can we have such bright cash flow and attract such high investments. Group buying has been around for a long time and is especially popular during holiday promotions in various stores. Through group buying, consumers can unite and accumulate small orders into large ones, thereby increasing their negotiating power with merchants to obtain the best price. Merchants can also use this to gather popularity, seize market share, and quickly increase sales. The popularization of the Internet has made group buying more convenient. Consumers can easily get together while sitting in the office and take the initiative to negotiate with manufacturers to obtain greater discounts. Group buying websites are such a platform. On the one hand, they provide consumers with attractively priced discounted products, and on the other hand, they also bring a considerable number of users to merchants. Groupon is so popular among consumers because it goes a step further than traditional group buying websites.
First, provide simpler options for both parties.
Consumers do not need to search for people to join a group for a certain product or service. They can always find enough people who are similar to them by logging on to Groupon. There is no need to travel all the way, consumers can complete the purchase with just a few clicks of the mouse. There is no need to contact merchants. Groupon has already done the bargaining, and with its professional negotiation skills and platform advantages, it can also obtain lower price discounts for consumers. Merchants do not need to invest heavily in advertising or spend manpower and material resources to organize buying groups. All they need is to provide the best price, and Groupon will take care of the rest. Even if you pay some remuneration, the effect of high-cost advertising may not be very good. It is better to do a discount promotion to give consumers real discounts. If the sales volume is large enough and the costs are fully diluted, you may be able to make a small profit.
Secondly, it creates a sense of urgency for consumers that “there is no such store in this village”.
Groupon understands consumer psychology. Only one product or service is provided a day, and enough people must be gathered to enjoy the given preferential price. In order not to regret it in the future, it is better to start early. Everyone places an order and everyone benefits. Even if one person is missing, everyone will not enjoy the discounted price. In order to gather enough people, many people put Groupon on Facebook and Twitter, thereby mobilizing people's interpersonal relationships and making Groupon better spread. Seeing others buying people, driven by the herd mentality, everyone is willing to follow. The biggest marketing failure that companies often encounter is that through massive advertising campaigns, they create a lot of buzz among consumers, but they cannot be converted into enough actual purchasing power. Groupon solves this problem very well, allowing manufacturers to quickly recover their capital investment. No wonder, it is said that up to 95% of manufacturers are willing to cooperate with Groupon again.
Third, the irresistible temptation of discounts.
Groupon is very cautious when choosing specific group buying products or services. The selected products are based on providing localized group buying in each city, and are mainly service-based, rather than discounted products, including SPA, skydiving, etc. Training courses and activities such as golf, skiing, canoeing and more. The discounts provided by traditional group buying websites are very small. In most cases, they are only 10% or 10% off. In good times, they are only 60% or 70% off. However, on Groupon, consumers get incredible discounts, and the discounts can almost reach 50% off. Around 10% off. These discounts are not only beyond the reach of traditional price killers like Walmart, but also e-commerce companies like eBay and Amazon. On the homepage of Tuanbao.com’s Changzhou station on June 26, the Shangning yoga fitness package, originally priced at 1,050 yuan, was discounted to 18 yuan per serving, a 99% reduction.
Ultra-low discounts will not only help prompt consumers with purchase needs to take immediate action, but will also arouse previously unavailable consumer demand. With such a large price discount, consumers who have no purchase demand before will be unable to help but dig into their pockets to consume, especially for those price-sensitive consumers who pursue economic benefits. This is similar to supermarket shopping. Facing the colorful shopping malls as far as the eye can see, consumers' desire to buy is quickly aroused. They can't help but pick up some items that are not included in the purchase list. Even those who are not ready to buy will not leave empty-handed. The ultra-low discounts on group buying websites also have such a temptation, making you feel itchy and unwilling, and finally you have to surrender and place an order. Satisfied the desire to buy, and found a real bargain, both emotionally and rationally, I can accept it, and I will naturally come back next time.
Fourth, only give consumers one choice every day.
This is the biggest difference between group buying websites like Groupon and e-commerce websites like Taobao. In today's extremely materially rich society, the more choices, the better. In many cases, more choices give consumers more troubles. Of course, this is fundamentally different from the era of material scarcity. Taobao tries its best to give everyone as many choices as possible, so that different consumers can find a product that suits them. However, it also brings great difficulty to consumers, while Groupon does the opposite and provides you with Carefully selecting a good product that everyone can trust not only saves you the time and energy of searching, but also reduces the risk of shopping. At the same time, precisely because it only launches one product or service every day, Groupon can easily accumulate enough purchases to form economies of scale and obtain lower preferential prices from merchants to attract more consumers.
Fifth, there is a different freshness every day.
A product is launched every day without prior notice. Consumers never know what product will be tomorrow. It can whet the appetite of consumers. Consumers are always full of curiosity and expectations for the next product, which brings freshness like playing a game. and stimulation. In order to satisfy this curiosity, consumers can’t help but log on to the website every day to learn about the day’s promotions and pay attention to the latest developments in group buying activities, thus forming a high level of website stickiness. Creating suspense and fully arousing consumers' curiosity has always been a common marketing strategy for companies. In addition to launching different products every day, group buying websites can also try other more gimmick promotion methods. For example, on the basis of the original discount, all consumers with any words in their names will also receive special discounts or gifts, and all consumers with birthdays that day will also receive special discounts or gifts. You will also receive a birthday gift, etc. to further enhance the freshness.
Can followers copy successfully?
Today's craze for group buying websites actually came about by accident. Moving traditional offline group buying websites online and fully leveraging the advancement of online media and technology is nothing new. But the rapid success of Groupon instantly triggered this craze and attracted a large number of followers. In fact, even the birth of Groupon was full of chance. What Groupon originally did was not a group purchase, but a website called The Point, which aimed to use the concept of time management to allow a group of people to complete the same thing within a time limit. However, they soon discovered that not many people participated, so they decisively decided to further narrow it down to "let everyone buy the same thing within a time limit" and launched the Get Your Groupon blog, the predecessor of Groupon, which achieved unexpected success. .
Can Groupon's success be copied? How long will this craze last? Groupon seems to be easy to copy, because its business model is very simple, almost clear at a glance, as long as you can find products with low enough discounts for consumers and find products with low enough discounts for merchants. A sufficient number of consumers. Therefore, many domestic group buying websites compete to imitate, even copying the page design, with little difference from each other. But, that's not always the case. There are two prerequisites for the success of group buying websites: you must continue to find products with such low price discounts from different merchants, so that you can attract more consumers to participate, and in turn, you must also be able to attract enough consumers. , can you ask the merchant for such a low price discount. The former is the brand effect, and the latter is the scale effect, both of which are indispensable.
Groupon has seized the market opportunity and quickly attracted a large number of consumers through its unique group buying model, increasing brand awareness and thus entering a virtuous cycle: because many consumers can get the best discounts, because the best discounts attract more More consumers. As long as these two prerequisites are met and this virtuous cycle is entered, followers can succeed. However, in comparison, attracting enough consumers is more important, because now supply exceeds demand, and suitable products are easier to find, as long as you have the purchase demand. Therefore, followers with platform advantages are more likely to succeed. Due to the Matthew effect, the strong are stronger and the weak are weaker. More and more consumers will gather at the leading group buying websites because they can get the best prices and provide the most guaranteed online services. services, and most of the followers will be eliminated by the market.
For followers, there are at least two opportunities to take advantage of: one is local advantages, and the other is market opportunities. This is why Groupon is eager to quickly roll out across the United States. It only started official operation in China in March 2010, and groupon.cn) has quickly covered 108 first- and second-tier cities. Localized procurement and services are the foundation of Groupon's success and also its greatest limitation. If we focus on a single regional market, give full play to local advantages, rely on regional affinity to gather a large number of consumers, establish a brand first, make good use of local manufacturer relationship resources, provide marketable and differentiated products or services based on local consumer needs, and integrate online and offline resources , adapt measures to local conditions and work hard, I believe there will be some achievements. Local media such as local forums, regional newspapers and magazines usually have such advantages. Even QQ and Taobao, which have strong online resources, and Dianping.com, which has the most service merchant resources, cannot compare.
4 marketing opportunities for businesses
Facing the raging online group buying craze, what marketing opportunities can companies take advantage of? I believe this is a topic that every marketer is considering. Capturing new marketing opportunities that are constantly emerging can often not only follow social trends, but also achieve amazing results. So what can companies do using group buying websites?
First, increase brand awareness. For those new brands that urgently need to increase their visibility, group buying websites are undoubtedly a good platform. The huge popularity gathered by Groupon makes every company covet it. Offering special price discounts to let more consumers know and understand themselves can be an effective supplement to other marketing methods. For the Chicago Auto Show in February, 15,000 tickets were sold out within one day after being placed on Groupon, and it even became a hot topic in Chicago throughout the winter.
Second, launch and promote new products. Whether enough consumers can be attracted to try it is often related to the success or failure of a new product launch. Sometimes, in order to obtain first-hand consumer opinions, companies will first launch the product in a small area, ask them to try it out first, and make improvements to the product based on their experience. Because it can both expand influence and build reputation, it has spawned hundreds of third-party platforms that specialize in providing trial services, such as Shike.com, Shike Alliance, Shike Square, and Trial.com. Choose group buying websites to promote new products in different ways, but the same effect can be achieved. A coffee shop in Chicago opened a new store and put gift certificates originally priced at $20 on Groupon for half-price promotion. 7,678 gift certificates were quickly sold out, quickly attracting the attention of more than 7,000 people.
Third, daily product promotion. Group buying can also be used as a daily online promotion method for enterprises. Every off-season or special holiday, manufacturers always carry out product promotion activities to seize market share and boost revenue. If it is extended to the Internet, it can be in the form of group buying, which can save manpower investment and there is no need to worry about the situation of being unable to cope with the flow of people.
Fourth, the sales model of special products. For some products or services, the scale effect is so obvious that when the purchase volume is high enough, the cost can be reduced to almost zero, and group purchasing can completely become its sales model. Take management training courses as an example. Assume that the original price of a class of 1,000 yuan can attract 50 people, and a 20% discount on Groupon can attract 1,000 people to attend the class. Then you can earn 3 times more profits, and the benefits are quite amazing.
Of course, just like other marketing methods, online group buying also has disadvantages. Group buying websites usually attract price-sensitive consumers. Many times they only choose your products because of attractive price discounts, and their loyalty to the brand is very low. As long as the same discount is available next time, they will immediately invest in it. other brands. Fortunately, "knowing its disadvantages and utilizing its advantages" is exactly the strength that we marketers have already developed in our daily life.
[This article comes from Zhan Shaoqing's blog "Marketing and Life | What's New About Marketing" ( http://www.marketing-life.cn/?p=3148 )]