The Eerie Similarities Between Groupon And Priceline

At the risk of someone saying I can’t let this Groupon thing go (I can’t), I saw a fascinating graphic the other day. Groupon has, as its proponents like to tell everyone they meet, the dubious distinction of being the fastest company to get to $1B in sales. Why I say dubious (and what I found fascinating about the graphic) is that the second-fastest ever to achieve the same milestone was none other than Priceline. How apropos because I can’t resist pointing out the similarities:

  • Both used tacky and expensive celebrity ads to promote their quirky brands (let’s call Timothy Hutton the William Shatner of this bubble).
  • Both thrive on the thrill of finding an outrageous deal (sales and scarcity go together like a horse and carriage; they’re two of the most effective merchandising tactics that exist).
  • Both are called disruptive models (Priceline lets travel buyers name their price; whereas, Groupon essentially lets companies split marketing costs directly with customers rather than with media companies).
  • Both have a “gross merchandise value” model (that basically means a lot of mystery around what customers pay and what the company actually earns).   

Commonalities aside, perhaps the even bigger insights come from some of the lessons from Priceline over the last decade:

  • Just because you have a disruptive model doesn’t mean you actually disrupt anything. Priceline’s reverse auction model was heralded as revolutionary at the time it was launched, but it has hardly become a standard for how people purchase travel or any other consumer products for that matter. In fact, people are still buying tickets the old fashioned way, by responding to prices that hotels, car rental agencies, and airlines set.
  • Selling OPM (other people’s merchandise) means others can get in on the competition. Hotwire got in the game by being “Priceline but better”; it ultimately got purchased by Expedia, Inc., and gets millions of monthly visitors.
  • Selling OPM means the OP can ultimately disintermediate you. Ultimately, Priceline was and still is dependent on whoever owns the supply of merchandise. In the case of flights and hotels, it’s the airlines and the hotel operators. Over the last decade, their direct-to-consumer businesses have burgeoned likely reducing what’s even available to a third-party like Priceline.
  • Getting to a billion fast doesn’t mean hypergrowth continues forever. Priceline may have only taken three years to get to $1B in revenue but took another eight years to get to $2B in revenue. Priceline tried diversifying into grocery and gas, moves that failed to accelerate its business and ultimately grew with an international business that focused largely on hotels.

Priceline, to its credit, wasn’t a dot-com flameout, and its economics today are promising. Its stock has quintupled in the past two years. It does provide a benefit to suppliers because it can protect brands, to a certain degree, from being routinely price-shopped. It just took a bit longer than its proponents from 1999 expected it would take to get to where it is. Maybe, just maybe, Groupon will have it easier, and get it right, faster than Priceline. 


And there is competition...

Priceline was significantly more difficult to replicate than Groupon currently is.

As a result there is a huge number of Groupon clones and the new ones are coming fast from multitude of directions, limiting the growth potential.

Nice post...will follow you

Nice post...will follow you on Twitter...


You're welcome. I think our Facebook page might be more informative:

I live in Poland, where we already have some 10 Groupon clones:,grupowe_zakupy_czyli_polow...

Even more companies are planning entering this market, including the local largest auction site Allegro:,101562,9133090,Nawet_Allegro_chce_miec_swoj...

Both articles are in Polish, but you can use Google Translate :)

Why doesn't groupon pay its members as much as this site?

Why doesn't groupon pay its members as much as ? This site pays its members 5 levels deep on each purchase made. It's free to join and free forever just like groupon. I am a member of both sites and i have to say that is by far the better. Why not get paid stupid amounts of money for something im all ready doing? Please let me know what you think? If you have any questions, please email me at Thank you


Why doesn't groupon pay its members as much as this site?

Group buying has become the smartest shopping strategy for customers, especially after the strong hit of the recession when people are looking out for smarter ways to save money in domestic shopping.

Groupon - A good place to find out deals!

Good stuff. Actually, Groupon is the best place to get your bargain purchase especially for airlines, theaters and other entertainment things. With the location based deals that are active now, it is more easy to find deals nearby your place. So, group deals are the blockbuster of growing economic condition.

Check this out to set up your own daily deal site.