Groupon Now – an interesting evolution of social purchasing

Over the last couple of years I have been following the “social purchasing” space and have written a number of posts on this topic. Most of them have been about Groupon and have been pessimistic about their long-term leadership position. While Groupon has grown tremendously fast and have gotten astronomical valuations, they were the innovator that defined the space. Today they officially launched a new product called Groupon Now that continues their positioning as a social purchasing innovator.

With Groupon Now, you are able to select a category that you are interested in purchasing and you are then presented with time based offerings in your area. Here is how the workflow progresses:

Step 1 – Select your location and the deal category

Groupon Now Category Options

Step 2: Select the specific deal that you are interested in.

Groupon Now Deal

Step 3: Pay for the purchase

Groupon Now Deal Purchase

Groupon Now’s benefits to retailers / merchants are two fold:

1. Merchants are able to provide offers that are counter cyclical to their normal demand cycles. So, if Tuesday afternoons are typically slow days, Groupon Now gives the merchant an opportunity to fill their excess capacity with a time sensitive offer. A major benefit is that existing customers revenues  are not cannibalized.
2. Merchants are able to provide more offers (ie. daily offers), something that is not possible with the existing Groupon structure.
3. The Groupon Now offering has a iPhone and Android apps allow purchasing while consumers are mobile, a perfect platform for triggering impulse buys.

So, the bottom line, I find Groupon’s product launch cycle impressive, and as the innovator, they make it difficult for copycat services to (1) keep up with their feature offerings, and (2) differentiate their own services. I still believe their valuation is too high given the competitive landscape, but for retailers, Groupon Now does provide an interesting new digital marketing opportunity.