Is this why credit card giant JP Morgan scooped up daily deals tiddler Bloomspot? Look out, Groupon!
Bloomspot , a smaller rival of daily deals company Groupon, looked to be in trouble until this past week. It couldn't expand quickly enough to battle Groupon or LivingSocial effectively, according to the experts.
Groupon: new challenge
Then banking giant J.P. Morgan Chase swooped to buy the company for $35 million.
Why would J.P. Morgan want to buy its way into such a challenged business? The Wall Street Journal asked the question - and answered it.
The huge amount of data data at the bank's disposal means that it can provide far more relevant discounts to its customers, said the WSJ.
The Groupon way is to extract offers from merchants and send them out to a huge email list . "Not very well-targeted, such emails quickly feel like spam," said the WSJ report.
"But J.P. Morgan has a huge credit-card business so it knows where its cardholders shop—and has a good idea of what they like buying."
Bloomspot brings to J.P.Morgan the expertise on how to structure deals- and J.P. Morgan can deliver coupons people actually want.
Another plus: J.P. Morgan can design offers that target consumers whose credit-card purchases suggest they're more likely to become potential customers.
Discounts can appear automatically on a consumer's credit card after they've made a purchase from a merchant. No need for consumers to prepay for the deal, print out a voucher and redeem it later.
Finally, says the WSJ, the merchant pays a far lower percentage of the total transaction value—about 0.5%. Groupon typically takes 40%
So, taking all that on board, will another credit card company make a move for Groupon itself ? Watch this space.