REPORT PREPARED FOR Groupon REPORT TITLE Business Model Analysis BY Go Digibonkers POSTGRADUATE DIPLOMA IN BUSINESS APMG 8119 DIGITAL ENTERPRISE 2015 By Shari Grenz Himesh Trivedi Viraek ID: 767701
Download Presentation The PPT/PDF document "REPORT PREPARED FOR:" is the property of its rightful owner. Permission is granted to download and print the materials on this web site for personal, non-commercial use only, and to display it on your personal computer provided you do not modify the materials and that you retain all copyright notices contained in the materials. By downloading content from our website, you accept the terms of this agreement.
REPORT PREPARED FOR: Groupon REPORT TITLE:Business Model Analysis BY: Go DigibonkersPOSTGRADUATE DIPLOMA IN BUSINESSAPMG 8119: DIGITAL ENTERPRISE2015 By Shari Grenz, Himesh Trivedi, Viraek Cheu, Pooja Cornelius and Swati Chawla
Agenda Business BackgroundRevenue Analysis Conclusion & RecommendationCost AnalysisValue Proposition 1 2 5 3 4
Business BackgroundHeadquarters: Chicago, United StatesFounded: January 2008 40 million customersDeclined $6 billion takeover offer from Google 150 markets in North America & 100 markets in the rest of the world Shareholders: Mainly American investment companies
Business Background Groupon offers a variety of deals on various goods and services.
Business Model - ProcessCustomers sign upMerchants sign upGroupon features dealDeal reaches publicCustomers pay GrouponGroupon pays Merchant Share Customer redeems coupon at Merchant
Canvas Business Model
Source of RevenueExplanationLocal DealsRevenue derived from partnering with local merchants such as restaurants, parlours etc on a 50:50 partnership. Goods Revenue derived from the sale of various merchandise such as electronics, clothing etcTravelRevenue derived from deals with travel based companies, hotels etc. Revenue Generation
Revenue Analysis
Revenue Analysis
OutsourcingCompetitionInventoryDependence RisksLarge target marketExpanding travel market Low overhead costs Advantages Risks & Advantages
Revenues are mainly generated through goods and merchandise, particularly in North America.Main risk of Groupon´s revenue model is the dependence on vendors.Pure online business allows to reach a large target market and additional revenue stream opportunities. Key Findings of the Revenue Model
Cost Analysis12Cost of RevenuesDirect + 3rd party Operating Expenses:Marketing + SGA + AcquisitionOther expense 43% $1.4m Inventory Shipping Fulfilment Inventory markdowns processing fees Editorial Technology Web hosting 8% $242kRefunds 8% $269k Online & Offline Payroll + Stock Others (discount…) 40% $1.3m Selling : Payroll + Stock Commission Others ( tech, telecommunications and travel ) General and administrative: Payroll + Stock Others (Depreciation maintenance, Tech…) 1% Interest Losses: FX… Legal advisory
196% & 32% Cost vs 123% RevenuesOpportunities and Challenges (Groupon, 2015):Shipping and fulfilment costs OutsourcingAcquisition Extra ongoing cost Ticket Moster and IdeelLegal and regulatory concerns Intellectual property claimsCost Analysis13
83% of the costs are direct costs and costs for SGA, another cost driver are the costs for growth through acquisitions Activity-base costThere are a lot of potential costs e.g. for legal issues, regulatory costs.Various initiatives have been carried out in order to lower the costs.Key Findings of the Cost Analysis
15Value = Returns > Expenditure.The most important aim for any business entity.Creating value helps in selling products.To understand value creation understand your target audience. Value Creation
16 Digital TribePeople with common interests and beliefs.No longer constrained or isolated by physical boundaries.Groupon - Digital Clubbers
17 Internal Organisational Perspective Compelling ContentContextCoverage Convenience Compliance Customer compensation
External Customer Perspective CombinationConversationChoice Comment Contraption No bundles of vouchers offered No online chat facility Limited choices of products available No platform for users existing Merchant app available but no app for purchasing Control Not a default channel to access services Consolidation It‘s not a one stop shop service Pros Real time deals Upto 70% off Wide range of products BUT
Digital Equaliser
Key Findings for Value Creation Groupon´s value creation from the internal organisational perspective supports the company´s growth.Groupon doesn’t have enough customer interface, better customer care/ services will certainly improve the value creation.
Theoretical Implications Considers all nine fields of the “Business Model Canvas” Including two parts of KPMG´s framework, value proposition and the revenue model + digital tribe20 C´s model of KPMG:Groupon fits in the 6 C's i.e. compelling content, context, coverage, convenience and customer compensation
Managerial Implications& RecommendationVendor relationships and contractsExpansionCost by function approach Internal legal team Combination and Conversation: Bundling, online chatChoice and Comment: Choices of products, platform Increasing Revenues Customer Satisfaction & Loyalty
Thank you! Do you have any questions?