The article in the url below features an interview with Andrew Mason, the founder and CEO of Groupon, the website that distributes daily coupons for its members:
“The basic idea is simple: The site offers subscribers (44 million and counting) at least one deal a day in their city -- say, half-off for sushi dinner or a spa treatment. But Groupon's innovation is the collective buying model suggested by its name: group plus coupon. A certain number of people need to buy into any given deal before it kicks in, or "tips" in Groupon parlance. Once the deal tips -- for example, 200 people have purchased a $40 coupon for an $80 massage -- the merchant and Groupon split the revenue roughly 50/50, and a group of customers has an unbeatable bargain.”
Groupon recently turned down a $6 billion buyout offer from Google. Mason wants to retain control over the firm because, as he says, “What we're trying to do is fundamentally change the way that people buy from local businesses.” Groupon tries to do this in two ways: first, by focusing on support for local businesses and, second, by its innovative policy of only allowing a coupon to be useable once a certain number of people have agreed to purchase it. As such, Groupon represents an interesting experiment in the idea of the social mobilization of consumers, made possible by the free flow of information that has emerged from the revolution in communications technology in recent years (Figure 4.4, p102):
“Groupon now promotes some 650 deals each day and more than 95% of those tip. Upwards of 26 million Groupons have been purchased world-wide, saving customers in the U.S. $850 million.”
While this group power is focused on consumption at present, it is easy to imagine how it can be applied to social activism in response to any firm action that runs counter to stakeholder expectations:
“Like so many other successful tech ventures, Groupon grew out of an earlier, less successful idea. ThePoint.org was a website for organizing campaigns like protests or fund-raising drives. And, like Groupon, it was built around the tipping point concept: The campaign was only carried out if enough people committed. But ThePoint never took off. ‘The big problem with ThePoint is that it's this huge, abstract idea. You can use this platform to do anything from boycotting a multinational company to getting 20% off a subscription to the Economist,’ says Mr. Mason.”
In order for this technology to be applied to some form of social movement that encourages firms to act in socially responsible ways, however, there has to be the willingness among consumers to act. On this point, at least for now, Mason is less confident:
“One of the things I realized ... is how few success stories there are in websites or products or businesses that exist primarily for an altruistic purpose. Most of the time, the things that really change the world exist for something fundamentally selfish and then the world-changing ends up being a side-effect of that.”
More information on Groupon and its latest idea, Groupon Now, can be found in this article in the current issue of Businessweek:
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David
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The Weekend Interview with Andrew Mason: Groupon's $6 Billion Gambler
By Bari Weiss
2213 words
18 December 2010
The Wall Street Journal
A15
