Great post! Groupon has struggled to create a virtuous cycle of network effects because of the negative effects from new users increasing competition for the deals and a lack of scalability on the deals supply side because vendors are difficult to access and individual vendors have a capacity limit for the number of deals they can offer. Moreover, many vendors are not savvy enough to evaluate the benefits that accrue to them from a specific deal. In response to this, Groupon acquired Breadcrumb, which is a POS system for restaurants (one of Groupon’s main vendor segments). This system has seamless integration with Groupon and allows vendors to accept and evaluate coupons and campaigns effectively. Additionally, this provides a new sales channel for Groupon, allowing them to sell to POS only customers and prevents easy integration of the POS with other deal sites.
Last year, Nike discontinued the production of their fuel bands and fired the entire fuel band team. Instead, they are opting to engage with the wearable technology revolution through partnerships with Apple and fuel integration with other software applications. If wearable technology and fitness/health tracking are the future, is Nike at a competitive disadvantage by outsourcing these innovations? Nike has always been at the forefront of creating and capturing value of new athletic technologies, will this continue to be the case if they are no longer the source for innovation?