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PESTLE Analysis of Groupon

Groupon is the leading online discount store, available in nearly 50 countries worldwide. Founded in 2008, Groupon is known for its extensive coupon deals for local products and services.The company works with merchants and drives consumer buying power through merchant products.

What factors influence the company’s overwhelming ecommerce power? Our PESTLE analysis of Groupon goes into the specifics.

“P” is for Political

Groupon is an ecommerce business. Strip it down further and it follows an e-business model. Ecommerce businesses aren’t affected by many political factors. But, as an e-business, they must abide by tax, environmental, and tariff laws. Tax is included in each country’s payment system. And product currency is based on the local currency.

Groupon’s online offerings are affected by trade laws in each country where products are manufactured and exported from. Government policies are shaped by consumer behavior, demands, and the opinions of citizens. Specific products may not be showcased on the site if it violates political law or regulations.

“E” is for Economic

Since currency is depicted locally, the company is at the mercy of currency fluctuations.

These fluctuations suggest Groupon is not recession-proof. But they offer timed, daily deals, to motivate purchases from every social class. The low deals are a win for everyone — customers receive cheaper items, and the tax is weakened by default.

The deals are what make Groupon a favorable online shop. Many “top deals of the day” tend to be local products, which saves exchange rates between vendor and shopper. It’s also what Groupon uses to market and reach many customers.

Groupon promotes local deals to new and existing customers through email and social media. It’s also a benefit to the merchants. With Groupon advertising through these two mediums, it reduces the cost of marketing for merchants.

“S” is for Social

Groupon runs businesses in nearly 50 different countries. Cultural differences affect what products Groupon shows to customers and the frequency in which certain products are bought. Groupon must regularly study consumer taste, demands, and preferences to tailor products to their geographical needs.

Prior to Groupon, using coupons tended to be a private affair. Consumers influenced by social status weren’t admitting to using discounts. But the stigma has been washed away with Groupon — specifically with young professionals and women. With Groupon active across the world, discounts and couponing are becoming acceptable by many ethnicities and cultures.

Mostly because products are tailored to the countries tastes. The deals offered for American audiences will differ from deals offered to citizens of China.

Groupon utilizes a “bring a friend” discount. If you invite a friend to join (i.e sign-up) with Groupon, you’ll receive a voucher to save more on daily deals. New customers also receive a voucher with the initial sign-up. It’s a referral business model that works for both company and customer.

Plus, the stigma of couponing dies further as more “friends” are invited to save with Groupon.

“T” is for Technological

Technology is the foundation behind Groupon.

They offer the option to use Facebook connect or email to signup. You can share deals via email, Twitter, Facebook, and Pinterest. Groupon’s business profile is available on LinkedIn. And all business transactions start through the Groupon website.

Groupon heavily relies on emailing subscribers about brand new (local) deals. A strong email list is a low-cost marketing method and provides a direct line of communication with customers.

Discount competitors may rise, but Groupon’s competitive advantage is their extensive local and international list of customers.

“L” is for Legal

Groupon works primarily with merchants who offer their products to the site. For that reasoning, both Groupon and the merchant must adhere to ethical terms and conditions in a legally binding document.

Terms of use must be agreed upon by consumers too — as they sign up to Groupon and when finalizing a purchase. Some of these legalities include terms of use for sales, policies for coupon use and/or cancellations, and other details relating to purchasing and using Groupon. All of these are up front and require customer and/or merchant to sign off before proceeding.

Products offered by Groupon must follow local and country laws. These vary by location and product.

“E” is for Environmental

Groupon prides itself on being environmentally friendly. Because shoppers buy products online, CO2 from driving to and from stores is reduced.

Groupon uses online marketing strategies (via social media and email) and reduces any need for paper or physical print outs. All communication between Groupon, merchant, and customer happens digitally. As a result, physical waste is reduced, compared to offline businesses and marketing expenditures.

In Conclusion…

As an ecommerce business, Groupon follows tax and tariff legalities. Because they’re an international company, they must follow political policies in every country they do business. They also offer products based on specific consumer needs to entice new and existing customers.

Their marketing costs are reduced as they make use of email, social media marketing, and their referral system. And because technology is a fundamental part of business, marketing, and customer demographics, they proudly declare themselves environmentally friendly.

Image: dennizn/Shutterstock.com

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The Author

Kiesha Frue

Kiesha Frue

Kiesha Frue is a freelance writer and editor with a love for health, wellness, and entrepreneurship. When she’s not researching into the sunrise, her nose is stuck in the latest (and cheesiest) of fantasy novels.