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Groupon VS Google Offers

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Groupon is about to face it’s biggest challenge yet – the 800-lb gorilla named Google Offers. Google Offers launched in Portland, Oregon today, June 1st. Woohoo! We’re even ahead of NYC and San Francisco.

The first offer is for 70% off at Floyd’s Coffee Shop. That’s not bad at all, but we don’t usually go to coffee shops, so we’ll skip this one. I’ll keep an eye out for a good deal on things we use, like baby products. πŸ™‚

I also like that you can just buy the coupon without having to worry about the minimal number like Groupon. On Groupon, a certain number of customers must buy the coupon before “the deal is on”.

Google Offers Portland Retire by 40

As some of you may know, Google made an offer to buy Groupon for $5.3 billion dollars at the end of 2010. Groupon rejected that offer and it looks like Google is going at it from the ground up. I think Groupon should have jumped on that deal, taken the money and run. The main advantage Groupon had was that it was the first coupon site to hit the market and it got a good head start on every site out there. The problem with their business model is the low barrier of entry.

Any company can set up a coupon website and simply being first doesn’t give Groupon an insurmountable advantage. Small competitors may have a hard time getting attention over Groupon, but I don’t think Google will have that problem. Google started out as a search engine behind Yahoo and other companies, but superior technology enabled them to dominate the internet. Once Google became ubiquitous, the company took the internet email business away from Yahoo as well.

We’ll see if Google can beat another company. Google will integrate Google Offers with Google Wallet so you can pay with your smart phone and show the shop keeper the coupon on it. I’m sure they will eventually integrate Google maps, email, and search as well.

Google Offers will be available in NYC and San Francisco later this summer.

What do you think about Google Offers? Would you use it when it come to your city? I like Google and will keep an eye on the deals. I have never purchase any coupon from Groupon yet. The coupons I’ve seen are all for superfluous items like limo rides and detox kit.
Up to 90% off top rated local fun!

I finally found a deal from Google Offers, read about it on the July 2011 cash flow post. πŸ™‚

 

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{ 32 comments… add one }

  • cashflowmantra June 2, 2011, 2:55 am

    You are right that they should have taken the money and run. Google has enough money to absolutely crush Groupon and likely would do it to teach them a lesson. Low barriers to entry will be leading to a price war and lower margins which Google can easily absorb.

    • retirebyforty June 2, 2011, 3:19 pm

      Not only that, Groupon depends on Google Ads to bring in new customers. Who knows what Google can do with the Adsense? We’ve seen many site getting banned from Adsense already.

  • LifeAndMyFinances June 2, 2011, 3:51 am

    Just like everything else Google does, I think that this venture will soar with success. Groupon should have definitely jumped on that 5.3 billion dollar deal. Now that Google is competing against them, they’ll slowly be put out of business.

    • retirebyforty June 2, 2011, 3:19 pm

      We’ll see if that’s true. I like Google a lot, but I think they need some competition too. πŸ˜‰

  • Kevin @ Thousandaire.com June 2, 2011, 7:10 am

    I’ve gotten some rounds of golf and some movie tickets from Groupon. I agree that they should have sold, but who am I to tell an entrepreneur what to do?

    I think the benefit Groupon has is that people don’t want to be inundated with deals. I won’t sign up for Google’s deal (or any other site) because I don’t want to sort through 15 deals in my inbox every morning.

    • retirebyforty June 2, 2011, 3:20 pm

      I don’t want to be inundated either. I’ll keep an eye on the volume of emails and if it’s too much, I’ll probably get rid of my subscription.

  • Justin June 2, 2011, 8:18 am

    I’m glad you pointed out that there is no minimum needed to “activate” a deal like on Groupon, that has always been such a gimmick. Local merchants can’t capitalize on economies of scale like big companies can, a lot of times the group purchase aspect has done more harm than good to local merchants.

    However, I don’t think Google Offers is an automatic home run. Groupon’s power lies in it’s email list and it’s sales force. Small, local merchants are still used to more traditional advertising avenues like their local paper or radio, this is where Groupon’s army of 4000 sales people come in. They will help the merchant transition to online advertising mediums. Google will try and out engineer Groupon, but engineering doesn’t solve the human problem. Remember, Google already tried bringing the AdWords model to local TV advertising and failed miserably, they’ve also got a string of other failures like Orkut, Wave, Buzz and others. The fight between Google and Groupon is really just beginning.

    • retirebyforty June 2, 2011, 3:24 pm

      I’m curious to see how it will turn out as well. I think these kind of things play to Google’s strength though so it’ll be different than Buzz for example. People have vested interest in Facebook and Google doesn’t really have any similar products. As for coupon, who care if it comes from Google or Groupon, right?

  • The Passive Income Earner June 2, 2011, 9:01 am

    They tried to buy Groupon! They usually do that to accelerate an entry into a market. It will be interesting to see since Google is used to see their apps/initiatives either grow virally (word of mouth) or simply die a slow death.

    To Justin’s point above, I think Groupon paved the trend but as the trend establishes itself, it may become natural for small mom and pop shop to simply contact all the different Groupon-like sites and reach out if they have seen benefits.

    For now, it’s only open for the US. No plans for Canada…

    • retirebyforty June 2, 2011, 3:25 pm

      That’s an interesting point. I have heard the shops do not really like Groupon because new customers didn’t stick. I’ve been to a pudding/crepe shop the day after Groupon and people are still showing up with the coupons. The owners weren’t happy with that.

      • Jeff January 3, 2012, 1:05 pm

        That’s not exactly accurate. Once they get the customer in the door, it’s up to the merchant to keep them coming back. There are many ways an establishment can do this – and sharp marketing prowess is a necessity.

        I know of one place that actually handed me a value card. after 5 visits (after the groupon visit) I got a free gift. Stuff like that makes me go to one place over another. The groupon allowed me to “sample” some fare, and now I’ll continue to get “rewarded” for may patronage. Companies that don’t do well with the groupon-style discounts probably wouldn’t do well with ANY type of coupon because the experience was underwhelming…

        And to Justin. The reason for the set number to activate is to benefit the Merchant. There is a commitment from groupon to “deliver” x amount of business to make the deal worthwhile. They even work with Merchants to not oversell them to eliminate a bad experience. The “stories” you read are usually from poor management on the merchant side. either they lied to groupon on the volume, or do not properly staff for the added business they get from such a deal.

  • krantcents June 2, 2011, 10:47 am

    Everything is at nanosecond speed! It was just 6 months ago, they offered to buy them and now they are in the business! I think that is an indicator how business is changing because it is online. The aspect of integration with other popular products may be a winner.

    • retirebyforty June 2, 2011, 3:26 pm

      It would be really cool if they can integrate with Google maps.

  • Miss T @ Prairie Eco-Thrifter June 2, 2011, 11:40 am

    I didn’t even know about this. Thanks for telling me. It isn’t in Canada yet but when it does come I will definitely keep my eye open.

    I have to admit I love Google, including everything they come up with and launch so I am sure I will love this too.

  • Paula @ AffordAnything.org June 2, 2011, 1:22 pm

    Google’s integration with your email, your maps and your smartphone will give it a competitive edge, but my favorite deal-site is Scoutmob … you don’t need to commit to buying the deal. You simply get the deal. One per day. And you have roughly 3 months to use it or lose it. But there’s no commitment on your end.

    • retirebyforty June 2, 2011, 3:27 pm

      I haven’t heard of Scoutmob at all. Can they compete with Groupon? I guess if they have something unique, they’ll be able to grab a niche.

  • Squirrelers June 2, 2011, 1:44 pm

    Groupon had first mover advantage, and in many markets that would give them an edge on a latecomer. It’s the first brand I think of within that particular marketspace, and I don’t think of the other players as much.

    That being said, I’m curious to see how this plays out because the rules of the game just might be different in the online world. Barriers to entry might not be nonexistent for everyone, but they just might be minimized for newcomers. Thing is, Google is a big part of the whole channel, so this is a unique situation.

    I too was surprised that Groupon didn’t take the money and run. Might have been a great opportunity to retire very, very early for some folks!

  • MoneyCone June 2, 2011, 2:14 pm

    Hard to tell! I love Google, but they haven’t been very successful when starting from ground up and competing against well established players.

    Facebook and Yelp come to mind.

  • Barb Friedberg June 2, 2011, 4:26 pm

    I’m drowning in email and when that groupon appears in my inbox, I just look at it as more junk. I have yet to participate! I don’t need anymore groupons or clones.

  • youngandthrifty June 2, 2011, 10:48 pm

    About time Google jumped on the bandwagon! πŸ˜‰

    Haha, wow, Google’s mantra must have been “if you can’t buy them, beat them!”

    I haven’t seen that on my google search bar yet- perhaps it’s not launched in Canada yet?

    I’m a fan of Groupon but I find it the daily emails annoying. Though I do buy them if they are good. Mostly they aren’t though, I don’t need 75% off laser hair removal, really.

    • retirebyforty June 3, 2011, 2:16 pm

      Google is still ramping up and it’ll probably be a while before they get to Canada. Haha! I don’t need laser hair removal either. πŸ˜€

  • Ginger June 3, 2011, 9:08 am

    If google offers and groupon have the same deal, I’ll go with groupon because I want the competition.

  • Marie at familymoneyvalues June 3, 2011, 1:49 pm

    If I owned Groupon, I would have taken the money and run!

    I won’t be using either site, I am one of those rare coupon haters! More trouble than they are usually worth.

    • retirebyforty June 3, 2011, 2:15 pm

      Hahaha. πŸ˜€ I wouldn’t say I’m a coupon hater. I just don’t like to buy things that I don’t need. Most of these coupons are for those kind of products.

  • Money Reasons June 3, 2011, 2:29 pm

    I think Google will cream Groupon. That’s probably why their IPO went for such a low price… Their days are number.

    After all, advertising for Google version of Groupon would be free.

  • Buck Inspire June 4, 2011, 7:09 am

    “If you can’t buy them, beat them?” Isn’t Google acting like Microsoft these days? Would be fun to see who wins in this shootout. We use dealfind and living social. There seems to be several players in this space.

    • retirebyforty June 4, 2011, 10:44 am

      I guess that what happen when a company has too much cash sitting around. πŸ™‚

  • Financial Success For Young Adults June 4, 2011, 8:50 am

    It looks like Google wants it all. I think they will definitely have some good offers. Another good deal site that is geared towards families is famgrab DOT com. They do deals without needing a minimum number of purchasers either. I think Groupon should be careful because once Google decides to jump in a market (smartphones) they are master implementers.

  • Lindy Mint June 4, 2011, 9:49 am

    I’ll be interested to see how Google does with this. Not everything they do is gold (what was that program that tried to replace Twitter – Google Wave?) , but obviously they’ve gotten some things right.

    I haven’t ventured into Groupon for my own city, but I’m considering signing up for some California cities that we like to visit on vacation.

  • James June 5, 2011, 5:19 pm

    Google is a monster didnt bing and yahoo combine their efforts to compete with google.
    TY for the post great read.

  • Benjamin Seeman November 27, 2011, 4:06 pm

    I have my doubts at take over even in the next 5 years. Google does a lot of things, but It doesn’t do anything new that’s great (with the excemption of search and ads). Take for example facebook vs google +. People are not switching right a way. I think a lot of people created google + pages because they already have a gmail account. I also think the circles was great, however the layout still needs work. The same with google talk vs skype. Skype as some nice features built in the desktop app that goodle talk still can’t do or they kind of half ass it in my opinion. You can video chat through “the cloud”, but you still cant do it through google talks desktop application. Forget about creating groups in google chat. I think I could of done that in the early 90’s with other IMs. Google email great in the cloud, but you need another program to sync your contacts and email with outlook. I also think the andriod is a nice , but still needs a lot of work. I know its cross a platform design for use multiple devices, but lets see…..iPhone hardly freezes…Andriod phone freeze every few days. In the end Google still needs to step it up, however I do see things leaning towards google in the future. No one wants to really use 10 different applications to do 10 different thing. It would be great if google can do it all and it do it all great. I’m currently a driod user, but apple has the right idea. Keep it simple, make it work, provide a lot of features, and your customers will be happy. I would also like to see google to step up it up in their fiber optic project and provide customers with a home internet connection to their home. Google “if you build it they will come”

    • retirebyforty November 28, 2011, 10:41 am

      Wow, thanks for the input. I agree that Google doesn’t get it right all the time. Google + is getting a slow start and only a few people are on it. Most of my friends prefer to stick to facebook. Who want to update their info in 2 places? πŸ™‚

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