Groupon Gets Holiday Savvy

This holiday season Groupon's business is set to explode. As shoppers hunt for deals, social coupon sites offer a unique appeal: fifty percent plus discounts, limited quantity and limited time offers to create an air of exclusivity and incentive to buy now. And all this without having to leave the house and battle the crowds at the mall. There are no official projections on how much Groupon-style coupons will grow this holiday seasons, but it's safe to say they'll contribute to the 9 percent growth expected from e-commerce revenue this year.

Social coupon sites have seen a huge spike in popularity - there are now 180 of these sites in the U.S. alone - and Groupon is by far the most popular, with 30 million users worldwide and an estimated $50 million in revenue a month. Groupon's already raised $170 million in funding and is reportedly on the hunt for more financing at a valuation north of $3 billion. Yahoo and Google have reportedly expressed interest in the fast-growing company, also for a price north of $3 billion.

Now Groupon is tailoring its deals for the Holiday shopping season, with a special site for the fictional holiday "Grouponicus." Here Groupon tweaks its formula - not only is it featuring deals that lend themselves to gifting, but it's offering them for a longer time than usual with no minimum number of participants. Christmas came early for Groupon when Oprah Winfrey (DISCA) featured the site in her "favorite things" show last week - it drew so much attention to the site that for a few hours it couldn't handle all the traffic.

Groupon, which was designed for local merchants, has also been increasingly popular with major retailer. Gap offered Groupon's first national deal in August to huge success-- hundreds of thousands of takers. A deal for a coupon to Nordstrom Rack, which Groupon started offering last week may be its biggest ever. American Apparel and Build-a-Bear Workshop have also used Groupon to drive traffic into stores. And LIM College Marketing Professor Dudley Blossom says it's definitely worth it for retail giants; if Groupons are timed with in-store promotions, retailers can "sell up" more merchandise than the coupon is worth.

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