Groupon Metrics- Same Merchant Sales
A closer look at Groupon numbers reveals the following information and begs the following question- is this sustainable? I will let our readers decide
Assuming a 50% discount being offered by Groupon on products sold ( ie they sell a 40 dollar gift card for 20)
1) The actual normalized revenues from merchants ( ie- without the groupon) would be approx 3.4 times (q1 of 2011 )the amount they actually earned from Groupon
2) Merchants are offering affectivly a 70% discount on products which they sell
3) Nomralized ( non groupon revenues) would have have been about $1.2 billion in the first quarter of 2011- to put in cleared numbers- Merchants left over $900 million dollars on the table by using Groupon -
The question is can these numbers continue to last- or to put it in plain english- will merchants continue to look at Groupon as something which is worth it for them to lose significant sums of money on.
SO a key question for Groupon is simply this- what is their current “same store sales” for merchant: Something which is not to be found in the SEC Filing- How many merchants are repeat merchants, the rate of repetition for their merchant base and any other detailed metrics regarding merchants- Because the key to Groupon is not how many customers will buy- people will always buy items at a significant discount- The key is- how many merchants will sell and if they do sell Groupons will they ask for better terms ? ( more on that later) with over hundreds ( not dozens as I metnioend earlier) companies doing the same thing it is something that really needs watching and this “same Merchant sales” is a key metric for potential success for Groupon
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