Groupon Inc Case Study

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Finding of Fact #2: One of Groupons missions and strategies is to grow the number of merchant partners, while also retaining the current ones.

There are many things that Groupon deals with on a daily basis, one of the most important factors is that Groupon has to figure out a way to retain and grow its merchant partners. By Groupon implementing incentives for merchants to join and stay with the company, this will make it easier for Groupon to retain merchants.

In the past if a merchant would be excepted by Groupon, the “merchant partner signed a contract that specified the percentage of revenue Groupon would collect for a from a deal (typically 50%) (pg.11-3, Business model).” Though Groupon is a way to promote business so that it may get people to come into merchant’s stores, it is also used to sell products without merchant interactions; still taking the 50% fee. If necessary, Groupon should continue to charge the 50% but should offer the incentive of lowering the percentage for those merchants that do stick around. For instance, once the contract is up for the term with a 50% stake, the company should offer that same company the opportunity to sign another contract at 40%, giving the merchant an incentive to want to continue to do business with the company. Understanding that Groupon needs to make money to continue its business as well, the company should have particular caps as to how far the incentives may go. With that, Groupon may base incentives off of how much a particular profit may be. For instance, if everyone knowing the gross income will be $200 or more, Groupon may offer a 45% incentive rather than giving the same incentive if the gross income would be less than $50. Groupon in itself is already an incentive for merchants to be able to sell products and services, but by Groupon implementing incentives for merchants to join and staying with the company this will make it easier for Groupon to retain merchants while making the merchants at ease of wanting to stay.

Finding of Fact #3: Groupon has many elements to its mission and strategy. Although all elements are important for Groupons growth, these three work hand and hand; grow subscribers and customer base, grow the number of merchant partners, and to expand with acquisition and business development partnerships.

Groupon has made it very clear of its downfalls. As a large and growing company Groupon needs a partner they can count on, one who will assist with their everyday activities. By Groupon creating a partnership with UPS, Groupon will grow the number of merchant partners, grow subscribers and customer base, and expand with acquisition and business development partnerships.

Since Groupon is a company like all companies who is in need of the income, one thing they could do is make selling easier for their merchants. The textbook has made it clear that merchants are “not completely at ease with the general mode (pg.11-3 para.2),” that Groupon is providing. Groupon will partner with UPS therefore all shipping will run through the partnering company. This system will make it easier for merchants to get products out in a timely manner, making it one less thing for the merchants to worry about. This timely manner will not only make it easier for the merchants, it will also make it easier for the customers. The customers want an easy and simple application, one they can just sit back and order their needs and wants and have it delivered to their door at ease and a timely manner. Customers appreciate this type of service, and they will not be hesitant to pass on the word of the ease that the company has provided to their friends and family. Companies like Amazon have taken the same route when they launched their Amazon Prime subscription. Customers pay a particular fee for the membership, which people do not hesitate to pay for since the ease of service. Though the company might take a slight hit for shipping purposes, these are all things that can be considered into the partnership, and upon price of purchases. This simple adjustment will grow the number of merchant partners, grow subscribers and customer base, and expand with acquisition and business development partnerships.

Work Cited:

Wheelen, Thomas L, J D. Hunger, Alan N. Hoffman, and Charles E. Bamford. "Cases in Strategic Management." Strategic Management and Business Policy: Globalization, Innovation, and Sustainability. 14th ed. Upper Saddle River: Pearson Education, 2014. 11-1 thru 20. Print