• Forrester, Tuesday, November 8, 2011 1:07 PM

While challenges abound, Groupon will “stick around and eventually get to profitability,” predicts Forrester principal analyst Sucharita Mulpuru. How? “With far less interesting deals for shoppers and probably as a smaller company,” Mulpuru says of the newly public company. What could go wrong? Where do we start? Because the majority of consumers who redeem prepaid vouchers are already Groupon members, the brand is going to have trouble growing incrementally, Mulpuru warns.

Also, email won’t drive growth moving forward, she insists. “While Groupon vaunts the size of its ‘subscriber base’ (i.e., email addresses), all evidence points to the medium becoming less important,” Mulpuru explains. “A significant portion of people who once subscribed to these emails no longer do, and many simply don’t want to because they have no need for more clutter in their inboxes.”

Still, the daily deals companies do have some big advantages, Mulpuru points out. “The consumers who do subscribe to these sites (especially the younger shoppers) all love to discover new products, brands or offers.” What’s more, “At the heart of all of these businesses, particularly the prepaid voucher space, are fundamentally profitable concepts. Groupon’s model of discounted offers that are presold and require no inventory investment could actually be very profitable.”

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