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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Groupon raises $1bn for global expansion

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Group buying website Groupon has raised almost $1bn (£641m) to invest in global expansion.

The US business, which launched into the UK during 2010 as part of an international drive that has saw it widen its coverage from one to 35 countries, has won $950m (£609m) in investment from companies including Kleiner Perkins Caufield & Byers, Maverick Capital, Silver Lake and Technology Crossover Ventures.

Groupon is known for harnessing the power of collective buying to negotiate deals with companies in local markets. During the last year it has increased its subscriber numbers by 2,500% from two million to more than 50m, and says it has saved them more than $1.5bn (£960m) along the way through daily deals that offer local consumers the ability to negotiate together a larger discount than each could get individually.

Thanks to the new funding the company will expand its reach further around the world, invest in technology and will also use some of the funding to give liquidity to employees and early investors wanting to realise their holdings in the company.

“We’re thrilled that Groupon has earned the confidence of some of the world’s most respected investment firms,” said Andrew Mason, founder and chief executive of Groupon. “With their support, we will continue on our mission to change the way people shop locally and serve the world’s local businesses.”

The investment comes just a week after it emerged that Facebook had won $500m (£320m) investment from Goldman Sachs and a Russian investor that valued it at $50bn (£32bn) - and appears to signal a growing appetite for investment in internet technology that brings together online consumers.

Our view: The power of the online consumer is at its strongest when it's organised. Offer to buy in bulk and there's often a discount available. Get together several hundred consumers and the discount is that much larger. That's where the power of Groupon comes in. The company was founded just in 2008 and is already in 35 countries: its key strength seems to be the ability to be local over such a wide area. In the UK alone it already offers deals to customers in about 36 cities.

There's a lot that online retailers can learn from this - and what they can learn has largely to do with the power of organised social networks. What Groupon does is not rocket science - individual retailers can and do offer deals in a pretty similar way to their followers on Facebook, Twitter or through other social networks. But it does take that initial energy spent on organisation to get it there.

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