Behind the Groupon phenomenon

Growth of crowd-based bargain-hunting site setting new standards

While it's nice to know there's still plenty of "wish I'd thought of that" room on the Internet, there's something oddly unsettling about the truly astronomical success of Groupon, which is built on a not at all complicated idea.

Must be this: Dang, I wish I'd thought of that.

From a Forbes story:

Groupon, a name that blends "group" and "coupon," presents an online audience with deep discounts on a product or service. Act now, says the pitch: You have only so many hours before this offer expires. That's a familiar come-on, but it's coupled with a novel element: You get the deal only if a certain number of fellow citizens buy the same thing on the same day. It's a cents-off coupon married to a Friday-after-Thanksgiving shopping frenzy.

What's in it for the vendor--which might be a museum, a yoga studio or an ice cream shop? Exposure. Since the resulting revenue is not only discounted but shared (typically, 50/50) with Groupon, the vendor may scarcely break even on the incremental sales. But it now has customers who might never have thought of patronizing the business. Groupon gets its offers in front of eyeballs by buying ad space through Google and Facebook and via the word of mouth of its 13 million subscribers.

Not yet two years old, some of Groupon's early performance metrics are trailblazing:

Groupon has grown faster than Ebay, Amazon.com, Yahoo, AOL or Google.

YouTube was the only company to reach a $1 billion valuation faster than Groupon, but YouTube did so without achieving something Groupon did in only seven months: profits.

The company is already doing business in 88 U.S. cities and 22 other countries.

The bad news for Groupon is that its model is easily imitated ... and has been.

One warning for those thinking about reading the full story: There's a picture of 29-year-old Groupon founder Andrew Mason and the smile on his face may make you say, "Dang, I wish I'd thought of that."

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