How Groupon Is Changing the Way We Buy & Sell



by John Gerzema (@johngerzema/twitter)

News that Groupon spurned Google’s 6 Billion dollar bid suggests its founder envisions an even bigger opportunity ahead – the market for mindful consumption. Few know Groupon evolved out of an earlier effort called Thepoint.com, which offers people a central place to organize campaigns and raise money for everything from environmental protection projects to disaster relief. Some campaigns involve individuals’ seeking donations to pay for college or rebuild after a fire. Others are devoted to raising funds for bigger causes, like medical research. The name—thepoint.com—was inspired by Malcolm Gladwell’s The Tipping Point, which examined the ways a certain idea, invention, or concept can become a widespread phenomenon once it reaches a “tipping point” where a sufficient number of people embrace it.
Thepoint.com had yet to reach its own tipping point when its founder, Andrew Mason, hit upon the Groupon.com concept. Mason began in his home city of Chicago, where he felt like he was stuck in a consumer rut, never going to eateries or shops other than the ones he was already familiar with, he told us by phone. He hunted down businesses that would be willing to offer discounts in exchange for a big surge in customers. He then began selling vouchers for these discounts online. The way Groupon works, businesses won’t honor the vouchers until a big enough group signs up to buy. Groupon is now the fastest growing company in the history of business.
Across the country another innovative method for organizing people emerged in San Francisco in 2008, when a local activist named Brent Schulkin urged hundreds of people to shop at retailers who agreed to invest more than 20 percent of the profits they earned from the group shoppers in energy efficiency. Called Carrotmobbing (carrots symbolize a positive incentive as opposed to a stick, that is, a boycott) the campaign had its first success at the K&D Market, where Saturday profits tripled thanks to the mob and the owner used some of the extra profit to pay for new energy-saving lights. Schulkin doesn’t promote his concept aggressively. Instead he offers his Web site as an organizing tool and local mobs have sprung up in Portland, Kansas City, New York, and half a dozen other U.S. cities. In each case businesspeople agreed to invest in some way that would benefit the greater good and were then rewarded with sales.

What if this ‘buying-with-a-purpose’ ideal in carrotmobbing met the scale of Groupon? In the post-crisis age, consumers are searching for value and values. In our research in BrandAsset® Valuator, 71% of people are actively searching for companies who share their values, while two-thirds believe they and their friends can change corporate behavior by supporting companies that do the right thing. Perhaps Groupon’s ultimate vision is to capture the idealism of Andrew’s first venture — Thepoint.com – and advocate for values-led consumerism. Imagine if collaborative consumption could force capitalism to be about better, instead of more. That would be a tipping point, indeed.
Groupon is one of fifty companies interviewed for the Wall Street Journal best-seller: Spend Shift: How the Post-Crisis Values Revolution is Changing the Way We Buy, Sell and Live.
John Gerzema (@johngerzema/twitter) is president of Brandasset Consulting and Young & Rubicam’s Brandasset Valuator, the world’s largest database of consumer behavior, attitudes and values. Michael d’antonio is a Pulitzer-Prize winning journalist, author and reporter

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