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David Zax

A View from David Zax

Groupon Will Take Your Order

With its iPad-based point-of-sale service, can it become an “operating system for local commerce”?

  • October 12, 2012

This week, Groupon launches a point-of-sale service for restaurants across the country, reports Reuters. (A point-of-sale service, in essence, replaces a cash register.) The service, called Breadcrumb, had been tested in some 100 New York restaurants, bars, and cafes before the wider launch. The service runs on the iPad—it’s $99 per month to authorize one iPad, $199 for two, $299 for five, and $399 for up to ten. With Breadcrumb, Groupon begins to look less like a LivingSocial competitor (or vice versa) and more like a competitor to Square or even PayPal (see “The New Money”).

Indeed, this is part of a larger pivot Groupon has been undergoing, one that CEO Andrew Mason has told Bloomberg would make the Chicago-based company something of an “operating system for local commerce.” In late September, Groupon also launched a service called Groupon Payments, which allowed its business partners to process credit card payments for a lower fee than other providers. The goal of Groupon Payments is both to make money directly and to strengthen relationships with local merchants, Groupon’s Sean Harper told Reuters.

It’s a relationship that, at least anecdotally, could in some cases use shoring up. In my own reporting—and simply over the course of desultorily redeeming my own Groupons that I bought in the Groupon frenzy of late 2010—I’ve encountered a number of New York merchants who were unhappy with their Groupon experience. A New York entrepreneurial couple I once spoke with encountered so much daily deal frustration that they invented a whole startup designed to clean out people’s mailboxes of unwanted daily deal e-mail.

AllThingsD took a solid look at Groupon’s financial performance in August. It’s been a downward slope. The company IPO’d at $20 a share and as of this writing is around $5.25 a share. Mason notoriously walked away from a $6 billion acquisition offer from Google in November 2010.

Groupon already has existing relationships with a lot of merchants, but it’s unclear how deep these relationships are—just as it’s unclear how deep your own relationship is going to be with some random bar across town you visit once for a deal on cheap mojitos. I’m a bit skeptical of the idea that a massive company can help lift up the mom-and-pops of the world in a significant way. The attempt to pivot to serve local business is an admirable one. But the lesson local businesses may continue to learn is that largely they are in control of their own destinies, and that the best way to inspire loyalty is to simply have a good product, and treat their customers well.

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