Google vs Groupon: Who Will Succeed?

Recently, Google was looking to acquire Groupon, however, that deal fell through when Groupon rejected the $6 billion offer.  Now, Google is rumored to be launching its own location-based coupon service called Google Offers.  The service which is expected to launch in the near future will be directly competing with the ever-popular (and fast growing) Groupon.

So who will emerge as the dominant player in this space?  It’s going to come down to two things.  The first being the deals.  The second being the ability to scale and add more locations on a regular basis.

Groupon already has a pretty big head start, but that doesn’t matter when you are competing with Google.  They have the resources and the ability to scale at a much faster rate.  Right now, Groupon has thousands of employees going to various businesses arranging its daily deals.  Whether a deal will be a success or not is hard to tell.  Of course, if a deal goes well, they can try to run it again and hope for similar success.  However, right now, the feedback channel on a per deal basis is lacking.  Groupon also requires users to input their information (location and email) so they can get access to their local deals.

Luckily for Google, they already have millions of people using their Gmail service, what if Google implemented its Offers service into Gmail similar to the way Buzz was implemented.  Immediately every Gmail user would have access to the latest deals right from their inbox (provided Google had deals within that users area).  This would be the best way to teach people about Offers and the best way to build up instant recognition of the new service.

Now, implement Google Buzz and/or Google Local support for feedback, comments, and real-time information and you could have something here.  Immediate deal feedback from users.  Not only could Google see how a particular deal is doing, potential deal buyers could as well which could influence people to buy it (or not).  It could also add a foursquare aspect into the service by adding recommendations or tips at a specific venue.

Google has a lot of options here to create a killer daily deals service.  They have all the parts, it is just a matter of putting them together into a nice cohesive service with great deals.  The scaling will not be a problem for them.  We’re talking about a company that took photos of every street in the world.

Should Groupon be worried?  If Google Offers is anything like what I talked about, then yes, Groupon should be a bit concerned.