Groupon may have just started a new problem. They have allegedly refused Google’s offer to buy them out. As recently as last week, news reports were brewing that Google and the Chicago based company were involved in advance negotiations. Reports were placing Google’s offer at $6 billion for the 2 year old organization which has created a buzz in the market.

Now that the deal has crashed and burned, industry analysts list two choices for Google. According to them, the heavily financed Google might take another shot at Groupon, or choose to develop its own Groupon like services and try to snuff out its competitor.

Dan Olds, analyst with the Gabriel consulting group says, “Groupon would have been a nice feature to add to the Google portfolio of social network like assets, but it’s not mandatory that they have this Groupon.” He adds, “In other words, there are plenty of ways to skin this particular cat, and Google has the reach and creativity to come up with a different route to connect customers to sellers in innovative ways.”

Groupon connects businesses with individual customers through its network. This facility generated an immense amount of curiosity in the market. Groupon is designed to send e-mails to customers about information about things to do in their cities, along with bargains, offers, sales etc. These can be useful bits of information for the urban online user. There are analysts like Augie Ray, with research firm Forrester, who pin part of Google’s failure to acquire Groupon with the valuation of the rising company.

"It's tricky to assess the worth of Groupon without meaningful more about its finances, but many question the billion-plus valuation for a two-year-old business that was valued at under .4 billion eight months ago at what time it raised its Series C funding," he noted. "Estimates of its revenue vary wildly, with some news indicating it will hit 0 million this year, and others reporting Groupon is on a billion run rate. Either way, those are amazing figures for a two-year-old company, which is why there's so much buzz around Groupon."

An analyst with IDC, Hadley Reynolds points out that there are a number of changes happening in e-commerce today. One of the more important changes is the increasing localization of online sales. Yahoo has recently come up with new service called Local Offers offering users information on local deals, merchants in their neighbourhood. Groupon fits in perfectly in this equation. Reynolds adds that the success of Groupon will depend on their competitor’s ability to discover the secret and beat Groupon to the retail market.

Google definitely wants a similar service, whether it choose to buy Groupon or build a clone, for their bazaar domination, according to Rob Enderle, an psychoanalyst with the Enderle group. This earnings that Google will aim to get this service somehow. He adds, “Groupon doesn’t have the resources to compete against Google if Google ramps up. And unless they find another big buyer, they are likely to feel a bit like Yahoo did after blowing off Microsoft. Self-screwed!”