Groupon as a Small Business Market Research Tool

Groupon's IPO is not the be all and end all that the financial markets have been praying  for.  External factors, principally the issues in Greece and Europe, will forestall any running of the bulls.  Groupon's IPO filing range was 16 to 18 per share; the final price was $20 per share.  Morgan Stanley and Goldman Sachs worked the deal, and it's said that they fully earned their $42 million in fees.

While Groupon's IPO was very successful, closing up 31 percent the first day of trading, it is in a sense. a bull market deal.  Two class stock offerings are by definition bull market deals.   In the IPO, Class A, which was offered to the public, has one vote per share, while Class B has 150 votes per share.  Typically, the market frowns upon two classes of stock, which tends to be used when a company is controlled by a family or some other dominant organization.

There is hope of more:  Yelp is rumored to be eyeing a debut, and Angie's List and a Groupon look-a-like, Shou, are in the que.  

I have always heard from the skeptics that Groupon would be squeezed out, as the retailers were becoming less enchanted by the high costs of the promotion, whereby they see little to no revenue from the promotion.  However, one observer noted that Groupon is an inexpensive a market research tool for small businesses, claiming this is by far the least expensive method of gathering market data on a market and customer base.  Which may explain why one of Groupon's investors, Accel Partners, is raising a $100m "Big Data" fund.

This thought gives one pause in considering the possible strategic directions and acquisitions in this product class, for or by them.