Overview IOU

The challenges for players in this giant market are key, including customer loyalty, achieving profitable long-term growth, and choosing the right technology and partners, among others.

At the same time, the tremendous evolution of blockchain technology is radically changing the way many markets operate. Important USPs of blockchain like transparency, coherence, cost-effectiveness and effective integration with processes at all levels of the business can bring to the e-commerce market endless opportunities.

Now, imagine the explosive combination of e-commerce, blockchain technology, and cryptocurrencies: the IOU Platform, a true P2P e-commerce loyalty platform on the blockchain.

It aims at empowering blockchain Merchants and Consumers with decentralized and secure Peer-to-Peer technology driving customer satisfaction and loyalty through Merchant’s trade-able IOUs. IOU Platform can successfully address many of the challenges of the e-commerce segment.

IOU is launching the IOUX token and a promising Initial Coin Offering (ICO) campaign. Below you will find all the relative information on IOU together with the specifics of the ICO campaign.

GROUPON FACTOR

Groupon, a true success story of pre Blockchain era, has taken advantage of the collective buying power of its users to offer deep discounts for services and products. The business model is a combination of coupon discounts and group buying. Coupon discounts and group buying are old concepts which date back to the late 19th century and early 20th century, respectively. In 1887, Asa Candler, a partner with the Coca-Cola Company, was the first to utilize coupon discounts as an advertisement strategy. Candler made use of various avenues such as magazines, mail, employees and sales representatives to distribute complimentary coupons to potential customers.

With over 100M total subscribers across over 500 cities in more than 50 countries, Groupon is the largest player in the local deals market. The company, a pure-play on the local deals segment with a proven success. Groupon offers “Deal of the Day” and other promotions on their local markets and thereby guaranteeing revenue and large number of customers for the local businesses. Local businesses do not have to pay upfront fees and need to share revenue with Groupon only if the deal achieves the minimum subscription. Groupon offers considerable savings to consumers who can discover services/merchandise that were not known to them earlier.

Groupon backbone of success has been its strong partnership that it created with local businesses breaking into new markets by researching the local market and identifying successful local businesses which are approached by the Groupon sales personnel. Groupon is best suited for high fixed cost businesses and business where the customer acquisition cost is very high and businesses have to advertise a lot and their deals offer them a channel to reach out a target consumer based in the local market without paying any upfront fees. Groupon is also best suited for businesses thriving on repeat customers such as spas and restaurants.

With much success, however, Groupon has met many challenges:

• Local Businesses Have to Figure out the Economics of the Deals. In some cases, local businesses offered deals in which there was no cap on the number of subscribers and the deal was oversubscribed. In such cases, local businesses ended up being unable to meet the delivery expectations and incurred huge losses. Businesses with unprofitable promotions have reported low rates of spending by Groupon users beyond the deals face value and low rates of return to the business again at full price.

• Low Barriers to Entry and Low Switching costs. Groupon’s business model is easy to copy, barriers to entry for the local deal market are low and switching costs for consumers and local businesses are low.

• Competition from other player is rapidly expanding to all cities in which Groupon is offering deals. Groupon could also face competition from players in the local review & search space such as Yelp, which has started offering deals.

• Consumer retention is difficult. While most of Groupon consumers are deal-driven and not long-term consumers its retention rate is about 20% which requires the company to spend heavily into sales and marketing expensive resources. Groupon’s consumer base is composed of deal seekers and bargain shoppers who are not willing to make purchases beyond the deal. The majority of users make onetime purchases at Groupon.

• Low revenue share is not sustainable for its merchant partners. Groupon takes a 40%–50% of the revenue from its deals. This arrangement is not sustainable in the long run as merchants learn quickly to move into search and other competitive advertising alternatives driving revenue away from Groupon by charging less.