Groupon Called Into Question

Both analysts and small businesses are calling coupon website Groupon's business model into question.It has even been accused of loan-sharking.One of the questioning analysts is Sucharita Mulpru of Forrester Research.
Ms.Mulpru notes that Groupon has lost more than 400 million dollars,and continues to lose.Their organic growth is significantly smaller than other numbers.They spent hundreds of millions to get to this level of growth,which will require billions of dollars more to sustain.
At some point,Groupon has to show someone the money and the valuation.There's some question that Groupon is actually driving good customers to businesses.Merchants haven't been convinced,and unless they are,Groupon won't get great deals to offer.
These customers are all people who have purchased at 50% off.If Groupon can segment the top 10% who will return to the business,that would be valuable.
Groupon's challenge is,they have not set themselves up for such an enormous growth trajectory.They can't afford to do that,and are getting themselves into trouble with dissatisfied merchants who feel they are losing money by participating.
Groupon is akin to Priceline,Ms.Mulpru points out.It was exciting at first,but their second billion dollars of growth took many,many years.
Such words and similar ones may well give pause to the many prospective investors in Groupon.
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