Groupon Case Study
Since it was founded in 2008, Groupon has experienced more growth than Amazon, Ebay, Yahoo!, or even Google in their first two years, with a projected revenue of $500 million for the close of 2010.
- Bandwidth (Why Low?): Groupon is a very basic website with simple commands and functions which explains why everything except for the scalability is low. Groupon does not require too much bandwidth in order to send the links for coupons and offers to users. Groupon does receive a good share of traffic but not enough for a large amount of bandwidth.
- CPU (Why Low?): Groupon mostly displays images. The only other commands Groupon has to accomplish are updating content, completing transactions, and powering its location indexes which require very little computing power.
- Disk (Why Low?): Most of the disk space being used in Groupon’s operations is being used to store personal information. Most other information is stored temporarily or as long as the offer is running.
- RAM (Why Low?): Accessing the information required is simple and does not require too much RAM. Depending on where the user lives, the information being pulled up will vary. But in most cases, the deals being offered on Groupon aren’t content heavy and not in a high amount.
- Scalability (Why High?): Groupon chose to power its website with Amazon EC2 cloud servers. Cloud hosting is one of the better methods of web hosting. It gives clients the ability to power their website no matter how high of demands and scale back when the demand goes down.
Since it was founded in 2008, Groupon has experienced more growth than Amazon, Ebay, Yahoo!, or even Google in their first two years, with a projected revenue of $500 million for the close of 2010. The company is currently valued at $1.35 billion and ranks as the 559th most visited site on the web, as of October 2010.
The concept behind Groupon is not complex, or difficult to replicate. As a deal-of-the-day website, Groupon offers one coupon per day in each of the markets it supports. Currently, it serves more than 150 markets in North America and 100 markets in Europe, Asia, and South America.
Working as an assurance contract using the platform established by its owner, ThePoint, Groupon requires that a certain number of people sign up for a specific offer. Once the minimum is met, the deal becomes available to everyone. Groupon then gets a cut of the deal from the retailer. Certain markets that Groupon does not feature are shooting ranges, abortion clinics, plastic surgeons and strip clubs.
According to Andrew Mason, Groupon’s founder, his motivation behind the idea of a website that offers special deals for subscribers was to get people out of their homes and experiencing things they might not have otherwise experienced.
Mainly, the traffic of Groupon.com originates from 8 countries, including United States (83.0%), India (3.7%), China (2.9%), Germany (1.5%), United Kingdom (1.7%), Canada (1.2%) , Russia (1.0%), South Korea (1.2%).
A customer of Amazon’s EC2 cloud services, Groupon accommodates its continuing growth and unpredictable traffic requirements with the flexibility of the cloud, which allows Groupon’s server allotment to grow and fall in tandem with demand.
Sites like Groupon especially benefit from a cloud-based solution as the popularity for deals will fluctuate daily, allowing for synchronous traffic/server performance, and an overall improved user experience.
“About Us.” Groupon. http://www.groupon.com/about (accessed October 30, 2010).
Amazon.com. “Groupon.com Site Info.” Alexa. http://www.alexa.com/siteinfo/groupon.com (accessed October 30, 2010).
“FAQ.” Groupon. http://www.groupon.com/faq (accessed October 30, 2010).
Melloy, John. “Groupon’s 1500% growth makes even Google look lame.” USAToday. http://www.usatoday.com/money/markets/2011-06-11-cnbc-groupon-bubble_n.htm (accessed October 30, 2010).
Steiner, Christopher. “Meet The Fastest Growing Company Ever.” Forbes Magazine. http://www.forbes.com/forbes/2010/0830/entrepreneurs-groupon-facebook-twitter-next-web-phenom.html (accessed October 30, 2010).
Warren, Christina. “How Groupon Uses the Cloud to Scale Its Business.” Mashable. http://mashable.com/2011/03/24/groupon-cloud-computing/ (accessed October 30, 2010).
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About Rebekah Perkins
Rebekah is an avid writer and former lacrosse player. She is also the Content Manager at NetHosting. Rebekah enjoys the pace and energy of the Internet industry as well as the rules-are-made-to-be-broken attitude of the English language.