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Comment by mbesto | Hacker News Reader

Groupon took your advice and (in my opinion) has contributed to their poor numbers. The problem is that when an established US company looks to expand, those countries tend to put a premium on expansion there. For example, if Groupon expands to the UK, sales people will ask for more money up front and put a premium on "acting faster".

Oh, and pretty much what everyone else mentioned... It's extremely difficult for any newly establish company to estimate how much red-tape (translate -> money) they will need to go through in order to trade in another country.

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Groupon makes more revenue outside North America than it does within it (in Q2: $308MM for international; $260MM for N.A. on a total customer base of 38MM users)

Groupon already has a presence in the UK, its international expansion particularly in europe was helped via an acquistion of another Samwer Brothers company MyCityDeal.de which became Groupon.co.uk, Groupon.de etc.

The reason Groupon is only growing 31% in Europe compared to in North America's growth of 66% is for several reasons including the fact that their deals are more expensive compared to their North American offers (this is confirmed by both Apple & Groupon in both of their earnings calls), the merchants aren't getting the same value from Groupon in Europe as North America which is because of the underlying fact they want higher prices AND finally because half the stuff that Groupon does in North America doesn't even exist/is in its early stages here; Deal personalization = early stages, Groupon's mobile offerings = not as advanced/early stages, its deal bank (searchable, unused Groupon deals) is at the same stage as well.

And what were all of the costs associated with expanding to the UK? What's the ROI of simply setting up shop vs buying a company outright?

> the merchants aren't getting the same value

Groupon (much to the OP's point) is like every mindless American out there who thinks that you can simply copy and paste an American business model into any part of the world. The world does not simply work this way, but we (Americans) are brought up to think so.

At Groupon's Q2 2012 earnings call[1], CEO Andrew Mason actually stated reasons why the International Market wasn't doing as well as it North American Market and in particular he focused on Europe, as highlighted by my points above.

The reason the merchants aren't getting the same value is because of what I explained above, that merchants aren't willing to give the same level of discount as their North American counterparts so people aren't redeeming as many deals, due to the discount not being as significant meaning the European market is only growing at 31%.

I'm actually from England, and Groupon actually made a smart acquisition from the Samwer Brothers of the MyCityDeal.de brand, even though it has received a lot of complaints (some of them were before the acquistion, and because the advertising laws across Europe all vary) however, Groupon has cleaned up these issues and openly admits to them which is why its outselling LivingSocial in the UK by 14 to 1[2].

Simiarly, whenever a company does any M&A it calculates the costs associated to expanding to the UK on its own, and the ROI from building its brand from scratch as opposed to purchasing a company outright and folding it into its brand. Whenever the costs benefits from an acquisition outweighs the decision to start from scratch, a company will always try and complete the M&A. Always.

[1] http://investor.groupon.com/eventdetail.cfm?eventid=116788

[2] http://techcrunch.com/2011/08/30/groupon-uk-is-outselling-li...

Guess who implemented Groupon outside of the US? The Samwer brothers. They created CityDeals, that merged with Groupon. One of the brothers has been in charge (unofficially, I think) of Groupon's international operations ever since.

Edit: Actually, Marc Samwer was head of international operations until earlier this year: http://gigaom.com/europe/marc-samwer-out-as-groupons-interna...

Facebook didn't do the mistake of buying the local German copycat (StudiVZ). StudiVZ is now dead.

Same in NL (hyves.nl)

haha....actually they DID want to buy StudiVZ :-)

But the VZ owner, Holtzbrinck, did not want to sell at this time. Obviously a huuuuge mistake in hindsight. Only after that refusal FB started to sue VZ.

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