Late last year we could not believe the stories we were hearing about the US voucher-provider Groupon. Google was considering buying the young start-up for $6 billion -- an incredible offering price given the fact that Groupon was founded just a few short years ago. However, the deal burst in December when Groupon decided to remain independent.
Now, six months later, Google is creating their own voucher service called "Google Offers." With Google Offers, the company will be giving customers the opportunity to collect special offers and discounts of more than 50% at the places they visit most often, in exchange for using the company's NFC service Mobile Wallet.
What I find surprising is the fact that so few describe the launch of Google Offers as an attack against Groupon.
I think it is. In going the coupon route, Google is attempting to make life more difficult for Gropoun from here on out. Here's what I believe are the top five reasons why Google has decided to go down this path.
Google desperately needs a business model in addition to its online advertising.
The company based in Mountain View has been trying for some time to build a second income by creating a business model for contextual ads. This still may not succeed. There have also been a number of launch failures, most recently Google Wave, which indeed had a lot of hope, money and resources riding on it. A few months ago, the service was completely suspended.
You'd think because of strong sales and profits, Google wouldn't care about finding new business models. Of course this is not so. It would be much too dangerous for the company to rest on their laurels. More and more companies are outsourcing time and large portions of their budget towards building social networks. Companies are realising that large portions of the population are spending an inordinate amount of time on these social networking sites, and if they don't capitalize on the social-networking trend, they will be left in the dust.
What if, then, one day Facebook cooked up a cooler, more effective search engine than Google? Why wouldn't consumers choose to search via Facebook given the fact that they already spend most of their time on the site?
Unrealistic? Certainly not! Google is aware of the danger of social networks like these, and it has been working on defensive strategies.
Google needs other business models. And they have been almost frantically looking for them.
Google has virtually unlimited online coverage...
In the coupon market, Groupon has catipulted to the top. Each month, thousands of users sign up for their daily emailed offers, making the company one of the fastest-growing in the U.S., and one of the most impressively-grown companies internationally. Now, Groupon is not alone in this market. Nevertheless, it provides a service no user could perform by themselves. One of the reasons, of course, is the fact that Groupon has successfully negotiated tens of thousands (perhaps even hundreds of thousands at this point) of deals with companies that it, in turn, offer these deals to customers. The company creates these attractive bargains again and again. Not to mention the fact that the company has stolen many talented writers from newspapers to write catchy emails, changing the writing scene in many American cities.
But no matter how professional and coordinated the Groupon deal structure may be, in terms of online reach, no one can touch the world of Google. If Google wants to give a product visibility, there is absolutely no stopping it. Google can more aggresively and effectively market a new product than any other American company except, perhaps, Apple.
...And has already become the king of mobile phones
With Android, Google already reaches millions of people on YouTube, Google Maps and on their default Android browser.
Google Maps + Vouchers = good friends
In general, Google Maps is a powerful tool that can be used for optimal couponing, answering the most essential questions:
- Where in my area are there coupons and bargains?
- How do I get there?
- Can I redeem a coupon directly online through Google Maps?
- And more!
There is virtually no company in the world that does not use the mapping service from Google. It is unlikely that Google will be the only company to think of mapping coupon offers. However, it is a company that will easily be able to integrate the two.
Google Wallet, Coupons and NFC is a winning combination
There is no coincidence that Google Wallet and Google Offers were launched on the same day. Coupons and tickets can now be sent over the internet directly to the phone. Should I want to redeem one, I wouldn't even need to print out a voucher, but could instead directly redeem it by showing the business my coupon.
Convenience wins. It's as simple as that. And I'm sure Google will be able to quickly win strong partners and build up an infrastructure quickly.
With Google, Groupon has a real competitor with a lot of functional weapons at hand in the war for coupon supremacy. The market is indeed huge and offers plenty of room for market share.
For customers, this is a win-win. Where there is competition, there will be better prices and innovation.