Groupon Brand: Growing Up, Slightly More Boring

Things seem to be a lot more serious at Groupon headquarters in Chicago these days. There are more accountants and lawyers, and fun-loving CEO Andrew Mason is cracking fewer jokes, according to a profile in Bloomberg Businessweek magazine.

That's because at least two very serious things are going on at the originator of the online-enabled, locally based discount deal. First, Groupon is straining to cope with growth expectations now that later-coming rivals such as LivingSocial, Yelp and others have mimicked its local deals business model.

But second, Mason and company have become very deliberate about advancing his plan to elevate Groupon above its competition — and to ensure its long-term future and robust growth — by becoming a key digital partner to small businesses across the range of their application needs. That means not just helping them produce a quick glut of customers responding to a Groupon-advertised coupon but also becoming what Mason calls "the operating sytem for local commerce" with tools such as loyalty programs, scheduling software, and potentially a credit-card payment service.

Groupon, launched in November 2008 in Chicago, still features "a daily deal on the best stuff to do, eat, see, and buy in hundreds of cities around the world." In fact, more than 500 cities around the world, and 48 countries at last count.

Looking ahead, Mason envisions consumers using Groupon "as a kind of Yellow Pages to search for new ideas on where to dine or where to find the lowest prices offered by thousands of local businesses," as BW puts it. "Merchants would use the system not only as a form of advertising but also as a touch point for every sale they ring up and a hook for bringing customers back."

"If we can come up with an ecosystem that local merchants use to run their business and it's connected to consumers, then I thin that'a s pretty sizable business," Mason stated. The CEO lately has even taken to serving as the maitre d' at a local restaurant just so he can learn more about the challenges faced by some typical local businesses.

But at least in Groupon's hometown, there are plenty of skeptics about whether Groupon really will be able to come up with a package of internet-based software and services that would have the same raw appeal to merchants around the world as the online discount coupons that have brought healthy numbers of new customers to them during some of the economy's darkest days.

"I didn't quite get" Groupon's customer-loyalty program, which is called Rewards, Bob Bothur, owner of Soundz Good Chicago, commented to Crain's Chicago Business. And the owner of the car-stereo installer said that his company already has its own scheduling system.

Meanwhile, as Mason & Co. fully expected, other online-couponing outfits are marching forward with their own plans to diversify as growth in Groupon's original idea levels off. LivingSocial, for instance, just announced its first foray into physical products with the launch of an e-commerce LivingSocial Shop.

So the obstacles remain for Groupon to remake itself in the face of an unimpressive stock price, at least compared with other recent tech IPOs, and Mason's decision not to sell his company to Google for $6 billion in 2010. Is it a decision that Mason may yet live to regret?