Groupon: Fastest growing company ever “redefines travel”

To say that Groupon has taken the group buying space by storm over the past two years would be an understatement. It is a phenomenon that has swept across the US and the world and has defined the “group buying” market.
It is impossible not to be impressed by these numbers. In the past 10 months alone, Groupon has exploded and now claims 30 million subscribers, 3,000 employees, offices in 30 countries and publishes daily deals in 500 cities. In August 2010, Forbes named it the fastest growing company EVER.

Even though we hear lot about Groupon, people still seem to be getting confused between group buying and private sales sites. Here is a quick explanation:
Group buying /collaborative buying / community buying

  • Customer acquisition marketing tool for local businesses. Requires a minimum number of purchasers to indicate interest before the sale becomes live.
  • Sites include: Groupon, LivingSocial, BuyWithMe, Bloomspot, HomeRun, TippR and now OpenTable’s Spotlight.
  • To be notified of new deals you just need to sign up for their daily deals email.
  • They tend to focus on a hyper-local approach featuring deals in specific markets. Local merchants create deals that are featured on the site, often with steep discounts in order to attract new customers.
  • Promotions can last 24 hours (Groupon) or up to 7 days (BuyWithMe) and normally generate hundreds, if not thousands of new customers.

Private sales sites:

  • Invitation only sites that feature limited time sales.
  • They tend to be more focused on luxury brands, as those brands are the most sensitive to discounting and are more comfortable doing this in a private sale environment.
  • They normally attract less new customers than group buying sites can generate – but the quality of the customers is better.
  • They tend to have higher quality brands and appeal to a higher quality audience.
  • Private sale sites rely on world of mouth and referrals by friends to build their communities.
  • Sites include: Gilt, Rue La La, Jetsetter, Voyage Prive, Vacationist.

Rob Solomon, COO, Groupon

At the PhoCusWright Conference we heard from Groupon’s COO (and ex CEO of SideStep), Rob Solomon who announced Groupon wants to “redefine travel” and that travel is “any time someone leaves their door”.

He cited examples for the travel industry of hotels selling thousands of room nights, specifically the Fairmont Sonoma, which sold over 2,700 vouchers in 24 hours. This is actually low for a “Groupon” – many of their sales range between 2,000-4,000 vouchers sold. Solomon explained how they want merchants to perceive them as a platform, just like Google, Facebook, Amazon, Twitter and Apple.

So what is the key to their success?
According to Solomon: Local deals + Local people = Success. There are many reasons I think Groupon has taken off; timing, the consumer’s increased desire for deals, first mover advantage, funding…. it is certainly a challenge for other players to keep up, and as sites are cropping up every day; and many struggle to carve out a point of difference, especially in the eyes of merchants who are all familiar with Groupon, for reasons both good and bad.

What’s next for Groupon?

  • They’ve already announced their plans for personalization.  This also means more opportunities for merchants and better, more relevant deals for shoppers.  With the size of their membership, they can potentially serve 50 deals in a market like Chicago, with over 1 million subscribers alone.
  • According to Solomon, everyone should be focusing on mobile, social, local, real time, global opportunities – more clues into where they are going to focus.
  • Groupon plans to partner with companies in the travel category to help them attract more customers.
  • And we’ve all heard the Google rumors…

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54 Comments on “Groupon: Fastest growing company ever “redefines travel””

  1. Steve November 28, 2010 at 6:30 pm #

    Where do I sign up for the Rob Solomon fanzine?

    • Mindy Joyce November 29, 2010 at 12:33 pm #

      LOL Steve! Thanks for reading my blog. All comments are welcome!

  2. Mikalee Byerman November 29, 2010 at 11:28 am #

    I’m so glad you posted this: My brother has been touting Groupon for months, and I just never quite understood it or the appeal. Now I’m getting why he’s such a fan…


    • Mindy Joyce November 29, 2010 at 12:36 pm #

      Hi Mikalee, Great! Thanks for reading and posting a comment. Glad I could explain the appeal 🙂

  3. EveryManAndHisDog November 29, 2010 at 11:31 am #

    Great Blog Mindy, groupon is a company to watch out for. I believe it may soon float on the stock exchange, so potential investers will no doubt keep a close eye on it.

    • Mindy Joyce November 29, 2010 at 12:35 pm #

      Thanks so much for reading and your comment. I agree. Definitely one to watch!

  4. runtobefit November 29, 2010 at 11:41 am #

    I have never really heard about this before. Will have to check Groupon out. Thanks for posting!

    • Mindy Joyce November 29, 2010 at 12:34 pm #

      Thanks for reading my blog. I appreciate your comments!

  5. enjoibeing November 29, 2010 at 11:51 am #

    i believe this because all my friends talk about groupon and how they still have their coupons to spend.i personally have never bought anything here but there are some sweet deals on the website.

    • Mindy Joyce November 29, 2010 at 12:34 pm #

      Thanks for your comment Jeffrey! True, a lot of people buy vouchers and never use them.

  6. evilcyber November 29, 2010 at 12:29 pm #

    Ten seconds ago I didn’t even know that a “group buying space” existed and, quite frankly, your article reads like a marketing plug.


    • Mindy Joyce November 29, 2010 at 12:41 pm #

      Hi Evil – thanks for your comment. Actually, I’ve been working in the world of group buying so I’ve had an insider’s look at this industry, no not for Groupon. But I do “get it” from both perspectives. It is interesting for sure and I’m personally amazed at what the company could do in 2 years. Didn’t mean to make this into a marketing ploy…

    • Mike Raven November 29, 2010 at 7:47 pm #

      A group buying space exists because there’s consumer demand for it, smart people like Mindy are around to analyze and take advantage of it, and online coupon providers have historically been lackluster. That you didn’t know it existed is nothing of which I would be particularly proud.
      I’m grateful for Mindy’s thoughts and insights. Far from coming off like a marketing ploy, her blog comes across like some sharp, much-needed analysis in a confusing, emerging space. Mindy, I look forward to your continued contributions. Thanks for helping us out with this.
      -Mike Raven

      • Mindy Joyce November 30, 2010 at 9:17 am #

        Hi Mike,
        Thanks for posting this. I appreciate your comment!

      • evilcyber November 30, 2010 at 4:55 pm #

        Mike, marketing is about creating demands, which in the end comes down to manipulation.

        If it makes you a better human to be knowledgeable in that field I leave to your perception.


  7. toashishagarwal November 29, 2010 at 12:51 pm #

    This is good & is a more formalised way of buying trends existing in asian countries. People here know that when buying goods in bulk / group definitely fetches better deals.

  8. Ava Aston's Muckery November 29, 2010 at 12:57 pm #

    I do shows all over the country (and world) so I travel a lot. I think I need to look into this. Thanks for bringing it to my attention.



  9. Kathryn McCullough November 29, 2010 at 1:42 pm #

    I blog from Haiti and suspect Groupon isn’t available in this market. Right?

    • Mindy Joyce November 30, 2010 at 8:52 am #

      Hi Kathryn, I don’t think they’re in Haiti yet, on the homepage of the site they have a list of all the countries and cities they publish deals in.
      Thanks for your comment!

  10. jaimeah November 29, 2010 at 2:41 pm #

    Hi Mindy. I just read about you working in this industry. It is rare to see a veteran of such a new industry, but I’m sure it does give you a different perspective.

    I have been studying this industry myself for some time, and I have had the opportuniy of talking with a few of the players here in Mexico (where it is a relatively new market, we have about 8 players, and the market itself is about 9 months old).

    I’d say I hadn’t really seen much activity in the travel industry (I guess all of the deals could be seen as appealing to tourism, but I find it more of a know your city local tourist kind of bent). What I really would like to see are more success stories from hotels, and I wonder if there has been something akin to a local airline giving discounts through one of these sites, and the success rate it has experimented (if you can point to one of them I’d really like to know).

    And if I may be so bold, could you share, based on your experience, what would you say are the driving factors for the success of hotel related deals?

    • Mindy Joyce November 30, 2010 at 9:14 am #

      Hola Jaime,
      Hotel deals are being incorporated into group buying sites. They’re not as frequent as the other deals, but you can find them.
      I think there are a couple of issues here:
      * There are simply too many merchants to contact in any given city. When you think about it the opportunities are overwhelming for many of these sites. When sales people are pitching merchants they may be told what content to get, what will perform better or sometimes it is simply an easier sale. e.g: restaurants, spas, salons etc. Group buying sites are focused on “local” deals so when you think about how often you travel vs go out for dinner, it makes sense to have an occasional hotel instead of them more frequently. However, there are opportunities for stand-alone daily deals for hotels…
      * Hotels are a different decision for shoppers and can be less of a “spur of the moment decision”, it is also based on availability. The vouchers that group buying sites sell tend to have less restrictions so hotels can be a little more complicated. Also, the hotels aren’t used to advertising this way, or most still haven’t caught on to group buying sites as a way of filling room nights. Unlike advertising, the price is determined between the hotel and the site, and hotels aren’t used to this. They are also sensitive to the average room rate dropping too low. There are a few hotels taking advantage of the space. Groupon had the Fairmont example and i have seen many others. LivingSocial has just bought a company called Urban Escapes that they are now using to position travel content as a stand-alone email. Hotels, especially the boutique and luxury ones, can be more successful on private sale sites when they don’t have to drop the rate by 50-90% and they can possibly get a better quality traveler…
      I think driving factors between hotel deals are that it is easy enough to inspire a trip and appeal to a broad audience with a hotel – as opposed to complicated packages (flight, car, hotel) and more niche trips like safaris and culinary tours. Anyone can start with a hotel deal and then build a trip around it. They tend to be at price points that are palatable, as opposed to thousands of dollars which can be overwhelming.
      It sounds like there might be opportunities in Mexico…?
      Thanks for your question!

      • jaimeah December 2, 2010 at 10:44 pm #

        Your input is fascinating, and what you say about hotels and the pros and cons of deals based on them is certainly food for thought.

        There are certainly opportunities in Mexico, the biggest players so far are of course Groupon and two new companies ( and www. Interestingly enough, both have european backing (Germany and Spain). I recently heard that Europe has elevated cloning business models (especially from the US) to an art form.

        We have no representation from LivingSocial (yet), but I heard that they intend to aggresively expand internationally. Have you heard such rumors?

      • Mindy Joyce December 6, 2010 at 3:29 pm #

        Hi Jaime,
        Yes, I’m sure they are. They just announced a $175 investment from so I’m sure they have very aggressive plans.
        You may have already seen the info on this but if not check out this blog post:
        They are already in 5 countries. It will be interesting to watch what they do next!

  11. nvd November 29, 2010 at 3:32 pm #


  12. notcomplicated November 29, 2010 at 4:49 pm #

    I’m obsessed with Groupon and every other deal out there. I think I’m a subscriber to most of the ones listed. It’s amazing, but deadly!

  13. makingup3000 November 29, 2010 at 5:08 pm #

    I keep trying Groupon but haven’t found anything I want to use. Today was 25.00 for fly-casting lessons. haha…so not me. But I’ll keep checking.

  14. gypsyjetsetter November 29, 2010 at 5:37 pm #

    Groupon definitely is a huge success all over the world! They’ve even won over skeptical consumers like me.

  15. Style Fest November 29, 2010 at 6:03 pm #

    Great article on Groupon and group buying, and i like the distinction between private sales sites. I’ll definitely be re-blogging this one 🙂

  16. klrs09 November 29, 2010 at 7:31 pm #

    As a Groupon subscriber I have to say I love the concept. I get to try new businesses in my area (Edmonton, Alberta) that I wouldn’t normally give a second thought to. I get some fantastic deals on stuff that really matters to me and all of the retailers/restauranteurs have been thrilled to have me frequent their businesses. Some of them I have liked enough to return to without any Groupon in hand!

  17. freshmanoncampus November 30, 2010 at 12:30 am #

    I actually just read up on some great Groupon deals and now you post this. Great timing and I enjoyed reading it. Thanks!

  18. laynechin November 30, 2010 at 1:16 am #

    I am totally a grouponer, who had scorn for this in the first impression.

  19. scheikh November 30, 2010 at 7:02 am #

    Hello, its too bad that there is no Groupon available in any European city!

  20. BornToInspire Barbara Sherry Rose, PhD November 30, 2010 at 8:42 am #

    It didn’t come across as any kind of “marketing ploy” at all. Your article came across as genuinely informative, and it is RARE that I read much on any site – but I did read every word of yours and I learned a lot that I didn’t know existed before.
    Keep up the great work – and PLEASE keep your writing style the same. It’s clean, positive, informative, well written and just enough to give all important details without going overboard.

    Great Job!

    • Mindy Joyce November 30, 2010 at 9:18 am #

      Thanks so much Barbara! I really appreciate your comments.

  21. sayitinasong November 30, 2010 at 9:26 am #

    Such a facinating trend. I had never heard of Groupon before. Very interesting read!

  22. Skirmish Paintball Games November 30, 2010 at 10:07 am #

    I always like to read interesting articles about any of the big online companies; facebook being one of them, and now Groupon.

    We use their services at a few paintball venues, but being a relatively new employee, I never read much into groupon, and especially didn’t realise their monumental growth.

    It shows there is life after bursting the bubble in 2000, and it shows that if you have a good idea that will benefit the masses, and it’s deployed in a controlled manner, then it there is money to be paid.

    People often say that making money on-line is easy, but I feel this definitely isn’t the case and it certainly needs the drive and desire to be successful.

    Nice article, and it would be nice to see some follow-up post’s regarding other companies 🙂

  23. Erin McKergow November 30, 2010 at 11:31 pm #

    Hi Mindy,
    Great blog. We’ve used Groupon and Living Social both this year to run specials for our whitewater rafting trips and Canopy Tour Zipline. I thought you might like some input from the retailers side of the fence. For us group buying has been a huge success in terms of attracting new customers and helping us to get the word out about new activities that we are offering. Our first deal this March was for 50% off our new Canopy Tour in SC and it attracted 400 new guests. We limited the number of vouchers available as we were sceptical about how well our business would do being 2 hours from the urban center. Our second deal we offered 50% rafting and didn’t limit the number of vouchers available – we sold almost 2000. Now we’re looking at doing regional campaigns with multiple deals per city for most of the SE region. The advantage of this type of campaign for us is the enormous number of new guests exposed to our business but the downside for all businesses dealing with these platforms is the heavily discounted ticket price (in most cases upwards of 75% off once the comission is paid). I definitely think that these sites are going to be an important part of our marketing campaign in the future but I am wary as I think that caution is needed. One of our competitors is selling vouchers valid for anytime of year and has sold thousands. I just don’t see how they will be able to meet their operating costs if all they do is discounted business. Any comments about best way for businesses to best utilize this new platform?


    • Mindy Joyce December 1, 2010 at 12:32 pm #

      Hi Erin,
      Thanks for your post. It is great to hear your perspective and how group buying is helping your business. I think you are using it in exactly the right way.
      These types of promotions work best when you identify your need periods, days or times when you need to attract new customers. To do it year-round is possible, but you’re right – your competitor may be giving away revenue when they don’t need to. Where I think a lot of businesses fail is they are either doing it too much and/or not following through on marketing to these new customers. If you get so used to seeing something discounted all the time then sometimes it can undervalue your brand and the consumer expects to see it at a lower price point. Using group buying to stimulate new customers in times of need is the best approach. Plan out your year when you need to do this and limit how many times you do it. You don’t want to offer a deal every day.

      The next thing to do is to create your own database of these new customers and make sure you are communicating to them and getting them back. Group buying promotions can do so much, but the trick is to get the new customers you attract coming back and telling their friends. I’m sure you probably are already doing this. These people can be advocates for your business if you tap into them the right way. Perhaps offer them a discount on their next trip or on one of your other businesses, email them on birthdays with a special discount or offer, offer them personalized tours and trips for a group of their friends and family etc. Facebook and Twitter are a great way to keep in touch and remind them (as well as tap into their networks of friends) about the great experience they had on the tour. You can also engage with them by asking them to post photos and video of their trips with you! That way all of their friends can see. 😉
      All the best with your businesses! Sounds like you are doing great things.

  24. Erin McKergow December 2, 2010 at 8:10 pm #

    Hey Mindy – that’s all great advice and some of it we already do – but could probably implent more effectively. Your reply also gives me some great ideas for strategies we hadn’t thought of using. Thanks!

  25. Baldwin Ng December 6, 2010 at 11:17 pm #

    Great post. I am in Singpapore and Groupon recently boughtover a local company,beeconomic doing the same thing. Friends & colleagues are scratching heads about why Groupon is leading, other than being first movers, the same goes for beeconomic(first movers in Singapore).
    I think the answer is Brand. Groupon’s site really stands out and their name not only stresses the power of a group and does not only rhyme with coupon but their slogan is: Get your group on.
    For beeconomics, in Singapore they are the only company that does not have the word ‘deal’ or ‘coupon”. They are all about being economic and their mascot is a bee. Interesting!

    • Mindy Joyce December 7, 2010 at 9:41 am #

      Thanks for your comment Baldwin. It is interesting to hear your perspective and good to know what is going on in Singapore with the group buying sites.

  26. Matt February 6, 2011 at 6:50 am #

    Mindy, I hope all is well with you. I just stumbled across this blog entry for a paper I’m writing on deal sites 😉

    Given our mutual background in the travel deal sector, I’m skeptical as to just how effective sites such as Groupon can be in that sector. The main difference between a site such as Groupon and a site such as Travelzoo is that Groupon handles consumer payment directly, whereas Travelzoo doesn’t. This means that Groupon can wind up selling 2700 vouchers for the Fairmont Sonoma, but the Fairmont Sonoma may not have 2700 room nights available that work for the customers’ desired travel dates. The frustrated customers then need to deal with Groupon directly rather than the hotel, since Groupon has acted as the merchant of record and is the one holding the customers’ money.

    In contrast, sites such as Travelzoo, Sherman’s Travel or Hotwire’s Travel-Ticker function as more traditional media models, and simply collect flat advertising payments from the suppliers (ie: hotels) up front. All subsequent payment transactions (and associated customer service issues) then occur directly between the consumer and the hotel.

    The biggest problem that sites such as Groupon face in the travel sector, or any sector for that matter, is their insistence on acting as merchant of record. This works well for their business model where advertisers pay nothing to be included in their newsletters, Groupon handles all payments, and then splits the profits 50/50 with the advertiser. Unfortunately it also places a large burden on Groupon, which now must handle all customer service issues.

    With sites such as Travelzoo, customers book a specific date at a specific price, and can usually cancel that reservation later if their plans change. With Groupon, customers must book at a specific price without knowing if a specific date is available, and usually can’t cancel later. What happens when a Groupon results in 2000 room nights being booked, but 1000 of those consumers are dissatisfied that their desired travel date is unavailable? Groupon now not only has to deal with those 1000 dissatisfied customers, but it must also deal with a dissatisfied hotel partner that’s frustrated at the 50% cancellation rate. I’ve heard that Groupon will only refund up to 20% of customers on any given deal, but that’s admittedly just heresy.

    These capacity issues aren’t limited to just hotels. Any Groupon that proves to be too popular for its own good results in similar complaints at restaurants, spas, or anywhere else where only a certain number of customers can possibly take advantage of an offer in a specified period. But at least with restaurants in your hometown you have some degree of flexibility as to when you could use your deal. With a hotel in another city, that simply isn’t an option.

    I interviewed with a couple of deal sites that wanted to get more involved with the travel sector, and they asked me how they could avoid those types of issues. I told them that they couldn’t be avoided unless they were willing to forego acting as merchant of record, but none of them wanted to do this. Until those sites are willing to change their business model, their effectiveness in the travel industry will be limited.

    • Mindy Joyce February 6, 2011 at 2:15 pm #

      Hi Matt,
      Great to hear from you and thanks so much for posting your comments on my blog. Your insights are great and very welcome. I hope you will comment again – you know I love this topic!! I agree with a lot of what you have said.

      I’m not sure if you are aware but Travelzoo actually launched ‘Travelzoo Local Deals’ last year. It is exactly the same group buying business model as Groupon, LivingSocial etc. so the voucher transaction does actually happen on the site, but the content is focused on experiences. They are not selling teeth whitening and drycleaning, like the others – it’s purely focused on restaurants, entertainment, spas & activities. Basically they are able to tap into a lot of hotel relationships and help them attract visitors as well as locals into their spas, restaurants and golf courses, which as we know will drive incremental revenue. I’ve even seen case studies where the hotel sales in the Top 20 double when there is a Local Deal at the property featured. They are also working with non-travel affiliated local merchants, but unlike many of the other sites, they are using their test booking center to test each deal before, during and after the sale to ensure a good booking experience ( I confess, that Sugarfly is actually doing some work for them right now but this is not pr spin, the above is all true.)

      For deal publishers thinking of getting into group buying for things like hotel nights and other travel deals it will be challenging. You are right, there are a ton of issues to think about. You have probably seen and heard the case studies about Groupon and how hotels have been overwhelmed and also attracting the wrong types of customers.
      Personally, I’d like to see the travel industry stop complaining about Groupon and others and do some research into what works for them. Perhaps a Holiday Inn Groupon would be fine. It’s a large chain with a basic standard that everyone knows and it appeals to a wide audience. For properties that are higher end or looking to target a specific audience, group buying hotel deals might not work. But, a Travelzoo Local Deal might beef up incremental revenue, or I still think the private sale sale sites are good for that too. There is no quick fix or magic way of attracting new customers.

      Going back to your original comment, I think the deal sites looking at getting into this model maybe need to think carefully about their brands and how their members/subscribers use the site. There is an incredible about of resources needed to launch a market, and with 500+ clones out there it requires a big investment to make noise. I think it would be possible not to do the local market approach, and just do national deals but then you run into challenges with the hotels, but if the site is niche enough and they are not emailing millions of people then perhaps in low volumes it would work. And then there’s the question of doing a deal of the day or just publishing deals when they are good. Users have come to expect deal of the day emails from these sites. It is very hard too, to pull off a national deal all the time, especially for a smaller brand that may not have the power to convince national brands to do this. You’re right – vouchers would have to be subject to availability and that could be an issue…. I do think there is room for a deal site to innovate and perhaps even create a new model, or an adaptation of what we’ve seen from group buying sites that they know their audience will use.

      I think it is all too easy for sites to look at the success of this industry and say we should be doing that too. What they really need, I think, is to take a hard look at their brand and their existing customer base. i.e: “What do our customers really want? How do they use the site? What will make their lives easier? Do we have enough of an audience to do something like this? ..and Will this support our brand strategy?” I think to get any traction with group buying they need to actually innovate. An example I like to use of new companies, which you may have seen is Off & Away, the suite auction site, and also Hotel Tonight, making last minute bookings super easy, and then there’s Hipmunk, – taking the agony out of flight search. I think successful publishers should find out what will make their members’ travel search, deal hunt or booking experience easier and not just replicate the group buying model. Sounds like you agree…?
      Nice to hear from you! Hope all is well in the UK. 🙂

      • Matt February 6, 2011 at 5:10 pm #

        I am aware for TZoo’s local deals, and from what I understand they’re also acting as MOR on those transactions, and are thus now dealing with the customer service headaches for them as well.

        I agree that deals with larger brands are a better fit for any site looking to be the MOR. In addition to chains, Groupon London ran a deal with that opened a lot more possibilities.

        Too many of these sites, and too many of the people who work for them, are media sites run by media professionals who’ve never had to deal with operational and customer service issues that people on the front lines of hotels, airlines, OTA’s and other suppliers have had to deal with. Now they’re learning that it’s not so easy, and in some cases it’s damaging their reputation. Groupon London has been having a nightmare of a time with PR, especially with regards to customer service. It’s improving, but I think they may have underestimated the investment that they’d have to make in that department in order to keep up with their incredible growth. Beyond that, I just don’t see how the mass-market model is sustainable with small businesses as long as the deal site insists on acting as the MOR.

  27. Manoj Gursahani February 27, 2011 at 7:02 am #

    Excellent article. In fact , the first Group buying Travel Portal focussing purely on travel related services has just been launched in India and the response has been overwhelming.

  28. Vincent March 16, 2011 at 10:40 pm #

    Well said. I never thought I would accept this opinion, but I’m starting to see things from a different point of view. I have to study more on this as it seems very interesting. One thing I don’t understand though is how everything is related together.

    • Mindy Joyce March 21, 2011 at 9:07 pm #

      Great Vincent. Thanks for your note. I appreciate you reading my blog.


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