How To

Challenges You Can Face While Developing an App Like Groupon

23 Apr 2018
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7 min

The principles of work of such services as Groupon are familiar to many people. Groupon gives users an opportunity to save some money. With its help, consumers are able to pay less for services and goods but under the condition they have bought a discount through this service. 

However, what challenges can you face? If you want to create a Groupon like app, we have analyzed all the problems that may appear during its creation.

We should note that from the technical point of view the development of apps like Groupon is a relatively easy process but your marketing strategy should be top-notch to attract users to such product.

What is Groupon app?

Groupon is a service that offers its users to purchase coupons for services and goods. In turn, coupons guarantee discounts up to 70%. The service itself is a mediator that promotes businesses.

The point is that Groupon generates motivated customers for its partners. So, if the service has managed to sell the number of coupons requested by a partner -- it gets a commission. But if not -- partners can refuse to provide a promised discount and do not pay to Groupon anything at all.

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However, the practice shows that in most cases Groupon overdoes the plan requested by the partner and gets 50% commission.

Why Groupon is so popular?

There are a couple of reasons for Groupon's popularity. First of all, the target audience of this service consists mainly of young consumers who willingly spend money (especially if you offer them a discount). Generally, the discount is the main thing motivating users to action.

Secondly, Groupon is viral due to its well-thought-out marketing model that offers users 10$ for sharing it with their friends.

How group services work

Groupon's principles of work

Challenges during creation of apps like Groupon

We can single out several main problems of apps like Groupon. The main problem is that such a business is considered to be risky since its business model can be easily plagiarized. That fact is proven by numerous Groupon's clones that appeared soon after the service gained popularity.

One more problem is connected with a business model of similar services that can be inefficient in some cases. Initially, the Groupon's strategy was to offer high discounts from different companies. This way, their partners consciously have some profit losses in favor of attracting loyal customers.

However, taking into account the fact that the main Groupon's partners are small and medium-sized companies. Such spending is not always reasonable for them. That's because they get a 'one-time' customer driven by a discount instead of a desired loyal one. Groupon has found a way out and started to sell ordinary goods. So, the service partially turned into another e-commerce store.

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Another problem is that to create a Groupon like app, you have to invest a pretty penny in advertising to promote various products and services. For instance, the company promotes membership in different clubs, cruise voyages and so on.

Other apps like Groupon have to do that because that is a kind of a product an ordinary consumer does not purchase every day or week. Besides, such an advertising not only helps them to complete a sales plan but remember customers about themselves as well.

Is there a sense to compete with Groupon?

Groupon is not still present in a variety of cities. So, there is a probability that the region you have chosen is free from any kind of group services. That is why you can create a Groupon like app of your own. Being a local citizen, it is much easier for you to learn what kind of group deals people from your region really need.

Groupon niche review

Except for Groupon, there are a number of companies providing their users with similar kind of service in certain regions. Underneath you can see some of their most popular representatives.

LivingSocial

The deals in this service are restricted in time but they give users an opportunity to save a lot of money if compared to ordinary prices without any discounts. So, customers can get discounts up to 90% in a city where LivingSocial is already working.  

Woot

It provides users with profitable offers in such categories as Home & Kitchen, Electronics & Computers, Tools & Garden, Sports & Outdoors, Fashion, Children & Toys & Wine. The service is more like an e-commerce solution since there is no coupon system and users may purchase goods for good prices. 

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RetailMeNot

The service offers its customers a cash back if they make purchases on the Internet on one of their partner company's website. The list of participating retailers consists of about 70 thousand stores. 

Ibotta

It allows users to get a cash back on a variety of groceries by means of performing small tasks. For instance, reading an interesting fact about the product, a quick survey or writing a short comment about. After the task is done, a user gets a promised reward.

Ebates

It offers coupons, hot deals, promo codes, and cashback. Consumers that join Ebates get a 10$ as a bonus. Then, they are able to make purchases on around 2 thousand of partner's websites.

Other services similar to Groupon

Services that compete with Groupon

How to make a Groupon like business model?

If you decided to create an app like Groupon you should focus on such vital factors in the business model as:

  • Reducing the cost of attracting customers;
  • Reducing customer churn;
  • Continuous improvement of the services you offer. 
Explore your niche and test your product

The main reason for group services failure is that their creators did not understand the needs of their customers and did not check the viability of their products. You should determine what problems are you going to solve. So, you need to collect the information related to the market you are going to deal with. It is important to identify trends in user behavior. After, start working on the marketing strategy. 

Focus on user retention instead of attraction

It is very important to gain a user base in the early stage of product launch. However, you should not focus on user attraction only. Since it will lead to the raise of total expenses on attraction and may become a reason for failure. There is always a chance that users will not return to your service again. So, it will become unprofitable through the time.

Use several channels to attract the audience

If you want your product to be successful, you should use multiple channels for its promotions and new users attraction. Focus your marketing efforts on giving your users an image of what your service actually offers as well as the creation of customized customer experience. Through the partnership with social applications, apps like Groupon can facilitate real interaction with users through social networks. You can use individual interests and habits of your users to offer them local events or services. 

Multichannel marketing for your Groupon like app

Marketing channels

Groupon features

Finally, we came to the technical part. As we mentioned earlier, the creation of an app like Groupon is relatively easy but still requires some basic features.

  • Login / Registration;
  • Personal profile;
  • "Invite a friend" feature;
  • Nearby offers;
  • Determining the location of a user;
  • Offers (food, spa, restaurants, shops, etc.);
  • Order management modules;
  • Several cities and categories;
  • Multi-language support;
  • Multiple payment gateways;
  • Seller's personal account;
  • Multi-currency support. 

The final price of a Groupon like app development depends on whether you choose iOS app development, Android or both. For example, Groupon had developed a web version of its service and only through some time got to mobile development.

However, remember that apps like Groupon demand a powerful marketing strategy in order not to fail. So, we can recommend you to develop an MVP of your service, test its viability, and change or replace features depending on your customers' reaction.

In case you need a reliable partner -- contact our managers to get more information and get a free consultation.

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