Groupon is Going to China!

After becoming a high valued company, experiencing doubts about that value, a Super Bowl commercial fiasco, and a host of consumers frustrated with the service, Groupon is keeping it moving by going into a new market. “Groupon Gears Up to Expand Into China” by Loretta Chao reports the company has made preparations for the arrival. The article reported the domain Gaopeng.com is registered in China and the Beijing office is established. China is a good market considering China has the highest Internet user population in the world. The problem for Groupon might be the fact that there already exists group coupon websites in China. Other things to consider are that Groupon has been having some rocky moments.

The most obvious of such moments is Super Bowl. Groupon surprised everyone by entering the Super Bowl ad market. The ads came a few months after Google offered $6 billion for the company, giving the company a very high value. There was this aura surrounding the company about the reasons Google would offer so much. Were they worth that much money? CEO Andrew Mason gave an interview in which he spoke highly of his company but refused to give a numbered value. His strategy was to feed into the excitement about their potential value; essentially, the company rode high on their suspected value. Within this excitement they enter Super Bowl despite Super Bowl usually being for bigger companies well established.

Well… we should all know how Super Bowl turned out for Groupon. CEO Andrew Mason is quirky and sarcastic but that does not translate well in 30 second commercials. The commercials were a parody on celebrity endorsed PSAs. The commercials were received as insults on the charities or social issues mentioned in the commercials. Despite Groupon actually donating money to these charities, it was not translated to the audience. Long story short, Groupon pulled the ads; not a good introduction into a major ad market.

Then, I read an article about Groupon not being well received in the Japanese market. The biggest problem is the coupons go out to a large group of consumers and by the time they get to the retailer, the deal is gone. Then, after Valentine’s Day, the same issue happened in the U.S. with FTD.com having a major discount on flowers. Of course, with it being Valentine’s day, one of the major holidays for flowers, with everyone getting early emails about the deal, and it being for a national website, many people expectedly tried to take advantage of the deal. Well, with so many people, the deal ended for many frustrated consumers.

The large amount of consumers rejected might be more so an issue with small businesses handling large customers. Nevertheless, consumers become frustrated with Groupon because it is expected they can handle the volume of coupons handed out. The point is the company needs to work better at handling massive volumes. Will this problem happen in China? And with China having regulations on businesses and the media scrutinizing public images, can Groupon translate their quirky public image successfully into the Chinese market? Also, can they even run successfully in China with their U.S. image taking a hit? I think Groupon needs to work through their rocky moments, prepare well for competition, learn to handle large coupon campaigns, and make sure their image is not lost in translation in China.