Groupon seeks to fight back

Warc, 7 March 2013

NEW YORK: Groupon, the daily deals pioneer, is enhancing its mobile and personalisation capabilities, as well as selling a greater number of goods, to try and reverse long-term losses.

Andrew Mason, one of Groupon's founders, was removed from his position as chief executive last week, reflecting the fact it has lost $723.8m in the last three years, and seen its stock price tumble.

Speaking at the Deutsche Bank dbAccess Media & Telecom Conference, Jason Child, Groupon's chief financial officer, suggested the firm would focus on products alongside targeted special offers.

More specifically, he argued the local deals business was the biggest opportunity, with Groupon only having worked with 500,000 of 18m viable merchants in its markets across the globe. In this context, selling goods has a wider purpose.

"In classic merchandising ... you carry a certain amount of products to just keep people coming to the store, and make sure that they're engaging with you," he said. "We try to do science but it's still art."

While this aspect of Groupon's operations is in its nascent stages, it has already learned that particular categories – such as drinks – hold considerable potential.

"The reality is as a four year old business, I think we're still trying to figure out exactly what the right purchase frequency of certain categories is," said Child.

Driving growth in its 46 markets outside North America is another primary objective. Rolling out its SmartDeals system, which generates personalised offers, and several automation tools is key here.

"We're able to sign up about two times more deals and get deals on the website with about half the people [in North America] compared to international," said Child.

In the US, some 40% of transactions currently come from mobile devices, and a further 10% from sources such as search, either conducted on Groupon's own site or via platforms like Google.

Groupon's emails direct mobile users to its app, which is now the main driver of its traffic for this channel. Engagement levels for mobile users are also 50% higher than website-only customers. Said Child: "Mobile is core part of the long term strategy."

Upgrade rates for its app are roughly 1.5 times faster outside the US, with devices powered by Google's Android operating system witnessing especially rapid progress.

Data sourced from Seeking Alpha; additional content by Warc staff