Posted: November 26, 2015 | Author: hongkongblogger | Filed under: Uncategorized | Tags: amazon, cautionary tale, daily deals, e-commerce, ebay, flash deals, gartner, groupon, IDC, IT Pro, retail, wall street |
Daily deals giant and one-time darling of Silicon Valley, Groupon, is having a hard time of it. An IPO in 2011 raised a whopping $700 million, apparently more money at the time than any US firm since Google. But more than four years after the flash deals specialist was valued at nearly $13 billion, there’s very little to celebrate.
In September, the firm announced over 1,000 job cuts as part of its ‘One Playbook’ plan to cut debt and kick-start growth. Its CEO has moved across to chairman and the firm is quitting several markets including Morocco, Panama, the Philippines, Puerto Rico, Taiwan, Thailand and Uruguay. In November the firm’s shares plummeted 27% after it forecast 2016 revenue of $2.75 billion-$3.05 billion, below analyst estimates.
So what went wrong? I’ve been chatting to analysts for a piece in IT Pro (Hong Kong) about this and the general consensus is that it shouldn’t have IPO’d when it did. IDC Retail head of Europe, Spencer Izard, told me that the firm simply can’t keep up with the demand for high quality deals on a daily basis, so it’s failing in turn to meet the insatiable growth demands of shareholders.
For Gartner’s Sandy Shen, it’s a vicious circle. Groupon is not coming up with consistently good deals, so customers are leaving. Merchants see these falling customer numbers and the fact that most are only after that one deal and aren’t returning, so they also lose interest.
For Miya Knights, global technology research director at Planet Retail, there’s simply too much competition for the firm these days, and not just from bricks and mortar stores, which have lowered their prices to match the web.
“Groupon was first to the flash deals party, but has certainly not been the last. The space it occupies has been filled with direct, global and local competitors that offer deals across a wide range of categories, like Wowcher in the UK. More niche, specialist deal sites, for hotels, holidays, and home furnishings etc. have also emerged to fill the space,” she told me by email.
“Groupon’s figures, however, show it still has a loyal customer base and that revenues are strong. It’s just that its business model is broken: it does not generate enough revenue from its daily deals, which is where the margin lies, and relies too heavily on selling goods at discount prices, where the margins are tiny.”
So is there any hope for the site? It’s now trying to rebrand as an online marketplace, but with the likes of Amazon and eBay also playing in that space, the future doesn’t look too rosy.
Posted: November 26, 2015 | Author: hongkongblogger | Filed under: Uncategorized | Tags: apac, asia, china, IDA, IDC, idg connect, infocomm development authority, singapore, smart city |
IDC recently released the results of a competition it ran to find the best smart city projects in Asia. As alluded to in my IDG Connect piece, I was keen to find out if these competitions, and the projects they seek to promote, are really very helpful at all.
My suspicion is that we can’t really use these competitions to judge whether one country is more “innovative” than another when it comes to IT. And I also have a feeling that in many cases, the smart city banner itself is little more than a handy, headline-grabbing way for self-aggrandising local and national politicians to attract foreign investment and talent, score geopolitical points and bolster their reputation as ‘visionary innovators’. It’s also pretty clear that Asia is far from leading the world when it comes to smart cities, despite pockets of excellence like Singapore.
IDC program manager for government insights, Gerald Wang, admitted that the picture was mixed across the region, and that the lack of legacy technology alone has not been enough to propel developing Asian countries forward.
“While it is true many cities in developing nations and emerging economies have been able to leapfrog the digital divide to what IDC coins the ‘3rd Platform’ landscape, they also lack the long-term experiences required in managing enterprise-wide ICT solutions,” he explained by email.
“This means these cities have to tread very carefully with their investments into new (sometimes untested) territories without the proper governance processes and manpower talents in fund-seeking, information management, standardisation and consolidation expertise, and building resilient environments that that withstand cyber attacks, etc.”
Leading by example
Singapore is an exception of course, in Asia and the world. Its size, relative wealth and tech savvy administration have helped produce the Smart Nation initiative, launched last year. Infocomm Development Authority executive deputy chairman, Steve Leonard, told me the goal was to improve the quality of life and opportunities of Singaporeans, especially given the rapidly ageing populous.
But he was also quite open about the initiative’s role as a tool for attracting foreign investment.
“Singapore has the unique assets that makes it easier for tech start-ups and talent to build and grow their business from here to serve other markets. Working on big enough shared global challenges that make an impact to people’s lives will inspire more entrepreneurs and talent to come to Singapore to test their ideas, and more big corporates to set up their innovation labs or ventures here,” he argued.
“It starts a virtuous cycle – talent attracts more talent, more ideas and start-ups are established, the excitement builds on itself and we get more breakthroughs. Investment capital naturally gravitates to where there’s a high concentration of great talent and business opportunities.”
So smart cities in Asia could actually be good news for western tech investors, from start-ups through to large corporates. But what about the other way round? Are local leaders also signing off projects with a view to exporting technology and/or services one day? Not quite, according to Leonard.
“Our goal is for Singapore to be a node on the global network. Different countries are doing different things and we can all learn from each other’s experience,” he said. “The challenges we are working on in Singapore are not unique to us, other countries face similar challenges. We believe if you can make it work in Singapore, you can have the opportunity to adapt and apply to other contexts.”
Nice idea. But I’ve got a feeling that more countries will be learning from Singapore than the other way round over the next decade.