Groupon Math: Data Scraping to Estimate Revenue

Paul Butler – April 15, 2010

There’s been a lot of talk recently about the Chicago startup Groupon. Groupon brands itself as a group-buying site, but it’s really more of a localized version of what does. They post a new deal (which they call a Groupon) every day, available only on that day. If enough people want to buy it, everyone gets it for a substantial discount. Otherwise, nobody gets anything, but this rarely happens from what I can tell.

Groupon Screenshot

According to TechCrunch, the company is in the process of raising money at a $1.2 billion dollar valuation. There was lots of speculation about the future worth of the company, but little information about current revenue, even though there is a lot of raw data readily available in the site’s archives. I put together a scraper (in just a few lines of Python, thanks to BeautifulSoup) and gathered a total of 1065 past Groupons.

It isn’t clear how Groupon decides which Groupons to display in its archives. Presumably they are the better selling ones, so my sample is not a random sample, which would affect the numbers. Everything that follows should be taken with a grain of salt, but they should be reasonable as ballpark figures.

According to the data I collected, the average Groupon costs $30 and entitles the buyer to 57% off. On average 1155 people purchase it, resulting in $28,130 of revenue to Groupon ($28,130 is less than 1155 * $30 = $34,650 because, apparently, people are more willing to buy the cheaper Groupons.)

Averages are nice, but what I really wanted was totals. I was able to approximate what fraction of the data I had because Groupon advertises the “Total dollars saved” and “Total Groupons bought” on every page. By dividing my numbers by those, I determined that I had a little over a third of the data. Specifically, my data covered 31.2% of Groupons sold, and 37.4% of total savings.

Extrapolating the data I had (again, with the disclaimer that my sample may not be random), I calculated the total revenue since the beginning to be $80,188,176. If Groupon takes a 35% cut (to take a wild guess), $28 million of that is left after Groupon pays the company offering the deal. According to CrunchBase Groupon employs 90 people. I won’t speculate as to the operating costs of Groupon over the last year and a bit of operation, but once you subtract that number the rest is profit to date.

Looking on a monthly basis, the recent growth of the company is clear. A third of the total savings — in over a year of business — happened last month. This works out to $26,706,059 in revenue last month alone, or about $9.3 million (less the operating costs) profit if you assume they take a 35% cut. The below graph shows the growth by month.

Groupon Growth

Whether or not it’s a $1.2 billion company (BusinessInsider says that’s actually low, though without any quantitative justification), they’re clearly doing well for a company just over a year after launch.

Here are a couple more graphs constructed from the data

Estimated To-Date Revenue per City

Average Revenue per Groupon

Update May 26, 2010: a few more graphs with more recent data follow.

Sales by Date Prices by Date Revenue by Date Price Trend of First Five Cities

To be notified of new posts, follow me on Twitter.