Are Chinks Showing in Groupon's Armor?

Groupon Japan

Groupon won’t be winning any international diplomacy awards this year — the blowback from their disastrous Super Bowl ad campaign percolated through the Internet for days, culminating in the announcement that the company was withdrawing the ads altogether. But the group-sales juggernaut is hardly being shunned by consumers abroad — just the opposite in fact. The New York Times reports that Groupon has had an enormous debut in Japan, with 5.6 million people using the online coupon service in November.

Still, all this growth, both at home and abroad, is not coming without hurdles, and chinks have been appearing in Groupon’s armor. The Times notes that “the young company’s performance is…exposing the difficulties of its simultaneous expansion at home and overseas” — specifically, a restaurant botched a major Groupon sale, prompting a large media outcry and an eventual video apology by Groupon founder Andrew Mason. In fact, while the Super Bowl kerfuffle was mostly an American phenomenon, Groupon’s service in the U.S. has been pretty smooth, with their biggest failures happening overseas.

Of course, none of these failures appear to be having a noticeable impact on Groupon’s unstoppable rise — in a little over 2 years since its launch, the company now sees over $1 billion in annual revenue in the U.S. and overseas, and boasts 50 million subscribers in 35 countries. Plenty of copycats have sprung up, but none have achieved the size, or market dominance, of the Big G.

According to the Times, “rivals now worry that Groupon’s blunders are starting to make Japanese customers skeptical of the entire deal-sharing business model.” But we doubt that a flap or two about poor restaurant offerings are enough to sour an entire market (particularly one as tech-savvy and consumer-driven as Japan) on the idea of online group sales. After all, as long as Groupon continues to offer the thing that draws those millions of users — exclusive deals with deep discounts — then the users will continue to flock to it. If you discount it, they will come.