The virtual battle over bargaining

For any company, a sharp increase in revenues combined with a considerable growth in a short time, means that competitors are on the way. This fact encourages that company to continuously improve and keep innovating to stay on the front edge and defeat its competitors.

One great example of this is Facebook, which started as a college project and turned out to be a 500-million user corporation. From the beginning, a number of competitors appeared, such as Hi5, MySpace and Flickr, but Facebook was always one step (or two) ahead. Offering appealing new applications or products to its users almost in a daily basis was and has been its recipe for success. Currently, Facebook (close to 1 billion revenue) is starting to think about Google (20+ billion revenues) as its main competitor. Unfortunately for Google, the social network’s growth is strong enough to think of this as a reality, at least someday in the future.

Now, let’s look at the Groupon concept. It offers coupons with huge discounts. As simple as that. The key factor here is that you will only obtain that coupon if enough people buy it, so you better spread the word. Groupon would then obtain a part of that discount if the coupons are finally sold. This has been easy enough for the Chicago-based company to have an amazing increase in revenues and new users.

Groupon’s growth has been so important that Google recently offered it $5.3 billion for its purchase (note that it’s five times the revenue of Facebook). What happened? Groupon seems to understand its opportunity and strengths so it has said NO to Google. This could be because it has some plans for expansion and some new offerings for the consumer. Let’s see how it goes. But it better step on the pedal since competitors are keeping up, especially LivingSocial.

But how can you innovate in such a basic thing as coupon sharing? Again, ask Facebook and its Places + Deals idea. The first part was launched around August, with which you could share your location (place) with friends using your mobile phone. The second, introduced less than a month ago, allows companies to advertise and offer coupons using the concept inside Facebook Places. Hence, if you are walking on South Beach you can log on to Places and, depending on your location, you can look at coupons and deals in stores or restaurants close to you, and of course share them with friends. Then you walk to that place, and only by showing the mobile screen in that store, you’re in.

There are yet no figures over the success of this new application by Facebook, but it is to imagine its potential to dethrone Groupon from the top, especially when we think about the Facebook’s 500 million users.

What are Groupon’s plans? Surely it must have something in mind after rejecting Google’s offer, but it better speed up. What do you think?