Where Groupon is going
Groupon 1.0 was meant to solve the same problem that traditional coupons are meant to solve: How do you get people into your store? Groupon 2.0 — a smartphone app where the user clicks on either the “I’m Hungry” or “I’m Bored” button and then sees a list of nearby deals that they could take advantage of right then to be either less hungry or less bored — is aimed at a different problem entirely:
Unlike Groupon’s daily deals, which tend to generate a flood of customers, Groupon Now might lure just a few, but at the right time. Rob Solomon, Groupon’s president, says the true promise of Groupon Now is to help eliminate perishable inventory—food ingredients, labor hours, and anything else that’s wasted if not used immediately. “If we can eliminate 10 percent of perishability, we can change the dynamics for small business owners,” he says. Small businesses would become more like airlines, matching supply against demand to maximize revenues.
If it works, it could be a gamechanger for local businesses. This could perhaps be a moment where we see the advances of the Internet translate into GDP and job gains with real force.
I also want to highlight the thinking that went into the two-button model. According to the Business Week story quoted above, Groupon’s original idea was to have dozens of buttons you could click when looking for deals. Presumably “I’m hungry” and “I’m bored” would’ve been joined by “I want to shop,” “I’m in the mod for breakfast,” “I feel like being outside,” etc. But one of Groupon’s investors insisted that the company “simplify the Groupon Now interface from dozens of options down to the two.” And I bet he’ll be proven right. Having dozens of options corresponding to all manner of customer moods and desires is smart. Having only two options, however, is genius.