The Competitive Landscape of the Local Deal Business
David is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Due to competitive advantage threats, Groupon (NASDAQ: GRPN) may not be the best opportunity in terms of long term investment options. Both Amazon (NASDAQ: AMZN) and Google (NASDAQ: GOOG) have made recent attempts to try to capture a bit of the daily deal market. However, at this point in time, they have both failed to take any substantial stake in this market. Despite being down 64% year to date, Groupon seems to be of fairly reasonable value now, meanwhile the company continues to strengthen its hold on its market and expand its geographic reach.
While Amazon and Google haven't made much of a dent in the local deal market, they have plenty of other areas of business where they are thriving. Google's most recent software update to its Android product line, Jelly Bean, is hands down the best mobile operating software that has ever been released. Likewise, their new Tablet which they partnered with ASUS on, the Nexus 7, is the best tablet currently on the market. It seems inevitable that Google's stock will eventually reach $1000, but it may take some time. Amazon continues to compete in the tablet business by stealing market share from the low-end side of the market with its endless array of Kindle products. While these products are not the most technologically advanced, they seem to fulfill a niche. While Amazons stock trades at an enormous premium, it remains one of the most innovative companies around, and continues to grow its product offerings and expand its business operations.
CURRENT ECONOMICS & THE DAILY DEAL
Current market conditions from a technical standpoint show an S&P 500 support of level roughly 1425 holding. Meanwhile market fundamentals are slightly shaky, however recent economic data has been strong. The companies that have the resources to compete in an economy of slow growth are generally the blue chips, which are able to utilize their vast resources to continue to grow. These companies are also able to increase investor confidence using tools such as share buybacks and increasing dividends. Another type of company that should be able to thrive in current market conditions are ones designed to save consumers' money. Consumers are desperately trying to cut down on their costs; fortunately Groupon offers an excellent service that can both help a struggling small business and offer discounts to consumers. Both of these services seem very applicable considering the current state of business.
Groupon has the business structure and mobility infrastructure in place to target the masses and thrive during a stalling economy. It could actually be argued that this is one company that would do better during a slowing economy as opposed to a thriving one in which people are less price conscious. Groupon seems like an excellent buying opportunity as long as one keeps an eye on the competition. I expect Google and/or Amazon to eventually gain ground, but at this time Groupon is leaps and bounds ahead in this particular market. Living Social is the only real competitor at this point and I see nothing but weakness from them after reviewing their website and offerings.
I have recently moved to Vancouver, BC, and have been impressed with their exposure and use in this urban mega center. I expect the company's international exposure to continue to grow. The ease in use of their mobile platform allows them to target a young and adapting population. While I have not purchased a Groupon yet, I was surprised at how many offers were available just in my neighborhood after doing some research.
MastodonCap has no positions in the stocks mentioned above. The Motley Fool owns shares of Amazon.com and Google. Motley Fool newsletter services recommend Amazon.com and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.If you have questions about this post or the Fool’s blog network, click here for information.