In his first official announcement since Groupon went public, the company’s CEO Andrew Mason has rubbished comparisons between his site and the countless copycats which have sprung up in the wake of Groupon’s initial success.
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For the many critics of Groupon (some who have gone so far as to refer to the business as a “Ponzi scheme,”) the relative ease with which one can duplicate the Groupon business model has been one of the primary critiques of the company.
Mason took this criticism head on, saying “There’s no doubt the barriers to entry are very low… We’ve had literally thousands of Groupon competitors launched around the world.” But he pointed out that “the data shows with equal certainty that the barriers to success are very high.”
Clearly not threatened by the competition, Mason argued that “The largest competitors have either dropped out of the space altogether, reduced their participation in the space or had flat or negative growth”.
“Our scale, our brand, our customer service and our merchant service, and increasingly the technology that we’re developing, is the core of what allows us to break away from the pack of competitors.”
“We feel like we’ve reached this point where our greatest competition is ourselves.”
Whilst Groupon may be confident in its product, the all-important stock markets seem not as confident.
Since going live to roaring trade and reaching highs of US$31.14 per share, the stock has had a tumultuous turn on the markets. Recently, in a single day’s trade, it saw a loss of more than 15% in value. Whilst it came back from those lows, it yet again faced another sharp sell-off seeing its stock drop 9% in value during a single days trade.
There, however, have been those who have defended the company’s stocks performance. Business Insider editor-in-chief Henry Blodget argues that the stock is actually in a normal, even though “painful”, period of transition.
Currently, Groupon’s stock is trading at levels marginally below its IPO price of US$20 per share.
