Rumour has it that Google has snapped up discount website Groupon for $5bn – probably more. What’s in it for Google?
For the past week or so, there has been considerable buzz on the e-grapevine of a possible Google/Groupon buyout, so the rumour about Google buying Groupon is quite credible.
Of course, neither Google nor Groupon have confirmed that it’s true (yet), but the deal would make sense. Google doesn’t yet offer any location-based deals, and it would be relatively easy – not to mention lucrative – for Google to integrate Groupon into Google Places, which lists local businesses and services.
It would be a logical fit. The purchase would extend Google’s dominance in online advertising, and help it gain local business dollars, to fend off competition from Facebook, which rolled out its own deals initiative last month.
Groupon is a lucrative business, having exploded onto the scene two years ago. Groupon is thought to turn over some $50m per month, offering big discount deals which only happen if enough Groupon users sign up to the deal (known as the deal “tipping”).
The group buying model works for both the retailer and for Groupon as, in return for a discount, the retailer is guaranteed a bulk sale, of which Groupon takes a small percentage or fee.
Groupon has been the subject of a lot of speculation in the last months. In April, a fundraising round valued Groupon at $1bn, and the business has continued to grow significantly since then.
Indeed, Groupon has 20 million subscribers across 300 cities in 29 countries throughout Europe, North America, Latin America and Asia.
Groupon is the original group buying discount site, which has since been cloned hundreds of time. In the UK, Groupon made an entrance through buying MyCityDeal earlier this year. Some of Groupon’s competitors in the UK include Groupola (owned by Mark Pearson) and LivingSocial.
The speculation about the buyout emanated from Vator.tv, a technology news website, which was informed of the deal by an anonymous “but reliable” insider.
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