Dependence on speedy Customer Growth for Revenue Growth: Groupon in this many years have failed to provide net positive incomes. As well as the subscribers rate has decreased rapidly. Till this many years Groupon was able to maintain positive net income by having rigorous expansion in to the new markets, but this strategy won't be helpful in the long run as competitors may explore those markets as well. Hence Groupon should find new ways to increase the profitability in the markets they are by providing differentiation.
Lack of Differentiation: Company Groupon is not based on any technological advancement, but is based on one innovative ideas that is the basis of the company. It is very difficult to provide a differentiation in an idea than in the technology. As well the business plan is so easy to replicate that it is mandatory for Groupon now to explore ways to provide differentiation to their users .
High Marketing Cost: It is very difficult to maintain customer loyalty as the customer base is only looking for cheapest deals with high quality and it is very easy to switch to other companies. Hence Groupon has to invest a lot in marketing to retain their customers thus adding up more pressure.
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If you do the math, merchants need to gross margins well in excess of 50 percent for Groupon to work for them. The promotion is very steep, usually 50 percent or more. Most businesses are built on margins of 75 percent, which means if the customer just comes in and buys the deal, the owner is going to lose money. Restaurants usually have higher margins. By offering huge discounts and giving 50 percent to Groupon, they just aren't earning enough to cover the cost of serving that