Deal of the day? Google in talks to buy Groupon

19 Nov 2010

Google is understood to be in early stage talks about acquiring fast growing local deals coupon website Groupon, which was recently valued at US$2bn to US$3bn.

Groupon sends business in the direction of local businesses by using the web to enable groups of individuals to buy products in bulk. The site makes a daily offer to each and every community in the 230 markets it is active in. If a certain number of people sign up for the offer the deal becomes available for all.

The site has more than 20 million subscribers and plans to serve 300 cities worldwide by year’s end. The company has introduced seminars and a training programme for merchants who have reported they have been overwhelmed by the amount of business the site has sent their way.

The rise and rise of local e-commerce

Acquiring Groupon would give Google considerable edge in a fast emerging e-commerce marketplace where sites with location-based technology who are sating consumers’ appetite for thrift and local businesses’ appetite for, well, business are proving very popular. It would enable Google to compete aggressively with popular sites like Yelp as well as Facebook which recently brought out Places and Deals to help drive physical retail business.

According to reports Google is in preliminary talks with Groupon and these talks may come to nothing. According to Kara Swisher of All Things Digital, Google had tried to buy Yelp recently but those talks fell apart.

The idea for Groupon came from CEO Andrew Mason and his former employer Eric Lefkofksy put US$1m seed money to develop the idea.

Since then, the rapid growth of the company has attracted investment of US$170m from investors, including Facebook, and an investment group led by Group in April valued the company at US$1.3bn.

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years