Wordpress Groupon Clone

Why Does the Groupon Business Model Work?

In this day and age, with the economy what it is, saving money is on everybody’s mind. Online group buying sites are just over three years old and have seen a rapid growth. As more people sign up for these sites, more businesses get it on the deals, which results in revenues climbing and capitalists wanting to invest. Groupon is the most prominent site of this type. It is based out of Chicago and the revenues of the company at the end of 2011 were estimated to be between 3 and 4 billion dollars.

Groupon clone type sites are a fast growing industry, with hundreds of different types of these sites springing up all over the internet. One of the main reasons for this is because the customer has found a powerful source in the internet. The idea behind group buying, as seen through Groupon, is giving customers the ability to pool together in order to have a more collective bargaining power.

The idea behind the Groupon business model is not a new one. For years customers have tried to pool their resources together in order to buy more of something. Often this would be in the form of resellers gathering to form a cooperative or a franchise in order to buy a larger amount of a product and then resell it at a higher price. Now, customers are capable of pooling together to purchase things that they want in a group, thus giving the consumer a lot of the power in the market.

Strengths of a Groupon Clone as a Business Model

The main strength of the business model that Groupon has in place is that it is giving power to the consumer. The site allows consumers to group their resources together to buy a product or service at a lower price. The idea of buying as part of a group allows companies to sell a larger portion of their product or service, thus allowing the lower price point.

It may sound like the business model in place for Groupon favors only the consumers. However, there is an advantage to the seller as well. The main advantage of the seller is that they do not have to sell their item or service to each individual or market to a single person. Instead, the business is allowed to sell a large volume of their product or service all at once, thus reaching a broader base of customers.

Essentially, Groupon as well as a Groupon clone selling website, will approach a business and tell them that they are willing to sell some of their inventory. However, I am going to take a cut of the profit and you will have to provide a large discount. In some respects, Groupon and other Groupon Clones are acting as a retailer.

Investors Point of View

The business plan of group buying is attractive to venture capital investors as well. The reason behind this is that there is a huge growth rate potential for any business of this type. Investors invest in growth potential and when they see how fast these types of group buying sites such as Groupon are growing, they want in.