Groupon – a failed business model?

I have followed several cases of companies in the pre-IPO phase, but perhaps none have been so maligned as Groupon – the folks who bring us our daily deals. Their supposed market cap has fallen by half, it now appears that a large number of initial investors were interested in cashing out and the overall situation continues to get tougher each day with established players entering the market and bad reviews which make it even more challenging to keep growing. All this made me wonder, if I could remove all the ‘bad’ from Groupon, could I come up with a business model that made sense, that was sustaining – and perhaps have a positive societal benefit, especially in the developing world.

Consider the following possibilities:

Each and everyday in the US, apparently over 27% of the food goes waste; and if a percentage is difficult to understand it roughly translates to around a BILLION pounds of food every year. Due to health and safety regulations many restaurants are forced to dump their unsold food at the end of the day, all this when we have an increasing number of people needing food-stamps just to get by. Couldn’t a Groupon type service help here? at the very least the food & beverage industry could recover its costs instead of literally emptying it down the drain.

Or consider a poor developing country where there often are challenges connecting buyers and sellers, the result being that the middle-man pockets a significant portion of the profit. In terms of the Porter Framework, it would be the ‘go-between’ who has the competitive advantage. But perhaps, leveraging the power of mobile technology (with basic features such as SMS) sellers could reach out to a far larger number of consumers in a more transparent manner. Here the middle-man could be the mobile operator (or even a governmental agency) who would use this service to enhance his customer base; increased traffic would benefit both the seller as well as the operator leading to a win-win situation.

The list could go on… and on…  Such ventures would be sustainable and perhaps – more fruitful.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours