Exactly. Amazon's acquired land was defensible, so to speak. Once it acquired a customer, that customer was likely to stick around.
As the numbers show, Groupon can only get 20% of all first time users to buy something. And yet, it counts all prospects as "customers." And even for those who do buy a groupon or two, what reason would they have to stay loyal to Groupon? At best, Groupon is poised to become one of many big commodity providers in this market.
(Speaking of Amazon, btw, what's to stop them from getting into this market eventually?)
Former Amazon employee, my comments do not necessarily reflects the views of my (former) employer, yadi yada.
Amazon's fulfillment infrastructure is the best in the world, bar none, full stop. It is so far ahead of every other online retailer that it's pretty sobering to think about.
Amazon can get items to you faster, more reliably, more cheaply than just about anyone else, by a pretty ridiculously wide margin. There is a tremendous amount of extremely non-trivial know-how within Amazon that permits them to operate like this. Even if you had access to all the money in the world you'd still have a hard time cloning Amazon's infrastructure... and at this stage, even if you had the know-how, the amount of money required is not within the realm of a startup's reach.
Compared with Groupon, whose uniqueness is entirely public knowledge, who have no capital infrastructure that is hard to clone. Who have no trade-secret business processes that give them a leg up over the competition. You can do exactly what Groupon does with a trivial amount of cash and know-how (and people do, see the ridiculous number of Groupon clones).
Amazon's acquired land is defensible, Groupon's is... really not.
Because they built up a heap of infrastructure required to consistently offer some of the best prices for goods online. Competitors could only really compete in niches because the startup costs to get to amazons scale would be massive.
With group deals, all someone has to do is setup a basic website and start calling up companies to find better deals than Groupon is offering, the customer doesn't care which deals site is offering a deal as you can signup to a new one in about 5 minutes.
With the deals site I've found aggregators to be more useful than the individual sites as the one which has the deal doesn't matter much. If I was looking for a book I wouldn't worry about an aggregator but head straight to Amazon or Book Depository which is also now Amazon owned.
As the numbers show, Groupon can only get 20% of all first time users to buy something. And yet, it counts all prospects as "customers." And even for those who do buy a groupon or two, what reason would they have to stay loyal to Groupon? At best, Groupon is poised to become one of many big commodity providers in this market.
(Speaking of Amazon, btw, what's to stop them from getting into this market eventually?)