Saturday, August 06, 2011

Groupon Has 115 Million Subscribers

According to Mashable Groupon has grown 127% since the end of 2010, that is about 115 million subscribers today. This demonstrates that no matter how competitive the daily deals market is, people will go to where the deals are.

The SEC is questioning Groupon's accounting practice when they filed for IPO in June with a $750 valuation. The IPO is delayed until mid-September as the SEC and Groupon are trying to straighten Groupon's accounting. If the number of users is true, which we may not know until the IPO is finalized, then Groupon is a little over a 1/3 of the United States' total populations and bigger than some of the countries out there.

I wonder how many of these subscribers are active. I doubt that 115 million users are buying deals everyday, week, or month. This market will definitely be an interesting one to watch as other deals are popping up through different channels, like Google Wallet and Facebook affiliations with American Express.

1 comment:

George said...

I have been a critic of the daily deals market for a while. The emergence of Groupon has been extraordinarily fast but at the time of their IPO, coule of questions arise:

1. As You mentioned in the post, the number of users that are active out of this 115 million is a big question mark
2. As the daily deals market reaches its saturation point (1/3 of the US is signed up...), it is a business model that is determined to consume itself. Finding deals efficiently drives down average prices to a point, where they cannot be driven down anymore. If restaurants and other service providers approach peak utilization, their incentives to cut deals diminish.
3. Majority of people have a tendency of mean reversion in their taste, meaning that they like to choose a couple of places to eat, hang out and do things, always trying out new stuff is tiresome.

All these aspects have a negative effect on the potential growth of Groupon (and all daily deals service providers). Now the test is whether the market takes these factors into consideration when pricing the IPO of these companies...