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Groupon reported surprisingly good financial results last week and it looks it is keeping more money from every deal, according to Yipit. While the “take rate” only increased slightly, it goes against the common notion that competition would put pressure on Groupon’s margins, indicating that barriers to entry are higher than previously thought.
As we discuss in our report about the daily deals business today, Groupon’s results gave us a few other key insights into the industry:
- Yes, daily deals is a real business that can be profitable
- Despite initial doubts, there are high barriers-to-entry and scale
- Daily deals is a winner-take-most business that can only sustain a few large players
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