When Google wants to copy or mimic your idea you take it as a sign that your company and venture is taking a step in the right direction. When Google puts an offer on the table and wants to buy your company and idea, though, you know that you’ve hit a home run. So imagine how it felt for the folks behind Groupon to turn down Google’s acquisition offer – estimated to be at around six billion U.S. dollars – late last year. Pretty liberating, right? And better yet, such a substantial offering for what in reality is a very young startup company means that Google saw a huge potential in what Groupon was building. And with Google’s history, I think it’s safe to say that the company is more than qualified at sensing killer business ventures.
Maybe it’s just me and perhaps it’s just the fact that deal-based services had caught my eye after the Google/Groupon deal caught media attention, but it really seems to me as if services offering “daily deals” have become more and more popular in the last nine months of so. I mean, look at how far deal site Living Social has gotten in the past couple of years, utilizing the poor state of the economy and the tighter budgets of just about everyone to push their service; even to the point of placing an ad during the February 2011 Super Bowl.
Recently, Google was looking to acquire Groupon, however, that deal fell through when Groupon rejected the $6 billion offer. Now, Google is rumored to be launching its own location-based coupon service called Google Offers. The service which is expected to launch in the near future will be directly competing with the ever-popular (and fast growing) Groupon.
So who will emerge as the dominant player in this space? It’s going to come down to two things. The first being the deals. The second being the ability to scale and add more locations on a regular basis.
Groupon already has a pretty big head start, but that doesn’t matter when you are competing with Google. They have the resources and the ability to scale at a much faster rate. Right now, Groupon has thousands of employees going to various businesses arranging its daily deals. Whether a deal will be a success or not is hard to tell. Of course, if a deal goes well, they can try to run it again and hope for similar success. However, right now, the feedback channel on a per deal basis is lacking. Groupon also requires users to input their information (location and email) so they can get access to their local deals.