Category Archives: Shopping

Groupon Gets $250 M from Comcast Fund: Synergies with Instacart, Next Door, Closely?

A Comcast-supported fund has plowed $250 million into Groupon, possibly leading to a broader role for the Cable and TV network giant, which could seek to leverage its enormous national and local reach from NBC/Universal and Comcast cable franchises to really make Groupon’s transition to a local marketplaces service work.

There are also possibilities to develop Groupon in the Hispanic market with the Univision Network – the mobile-driven ecommerce Hispanic martketplace is poised to take off. Several options also lend themselves via Comcast Ventures, which holds portfolio investments in Closely (loyalty services), Next Door (hyperlocal neighborhoods) and Instacart (delivery). The latter could play off Groupon’s recent focus on restaurant delivery services.

The investment comes from Arairos, which is headed by former Comcast CFO Michael Angelakis. Comcast funded the effort with $4 billion last year.

if there were any doubt that Comcast was contemplating a hands-on role, the companies said in a statement they would be working together to “identify and implement potential strategic partnership opportunities.”

Comcast is not exactly a newcomer to local marketplaces. In addition to selling advertising, typically at the large SMB level, it has sought to develop several local media properties, from local city guides to Daily Candy, a women’s consumer newsletter that ceased operations in 2013. NBC also has a history with the city guide-and-deals marketplace.

LSA16: Beacons as ‘A Platform Multiplier’

Belly’s John Mazur and Yext’s Raj Nijjer at LSA16. (Photo, LSA Insider)

Wireless in-store Beacons – which can identify registered users and match them to transactions, redemptions etc.– are a key part of loyalty programs run by Belly and First Data’s Perka, among others.

Speaking at LSA16 this week in San Francisco, Belly EVP John Mazur said that the loyalty company now has 12,000 SMB and franchise clients. These include a high percentage of 7-11 outlets. Customers are provided with iPad Minis, which include beacons (although not all of them are installed at this point).

While the beacon efforts are still in their initial stages, Mazur notes that Beacons have resulted in a 30 percent boost in check-ins, as Beacons capture registered members who are browsing in stores and nearby – not just those signing in when they make transactions via card or App. The beacons not only recognize Belly’s seven million registered consumers, but others as well.

“Beacons are a multiplier” for the marketing platform, and support and inform marketing budgets, adds Mazur. “They make things more seamless and reduce friction. “Loyalty, payments and beacons efforts are all converging” to provide better feedback to SMB and to complement marketing solutions, he notes.

Speaking on the same LSA session, Yext‘s Raj Nijjer said Beacons are a key asset to the new geolocation economy, and noted estimates that Beacons will generate $44 Billion in new commerce revenues. “They are truly an online to offline solution,” he said, noting that Yext has deployed beacons to “a lot of SMBs.”

In deploying Beacons, most SMBs initially focus on the retargeting piece — “take 20 percent off for having been in the store.” Messages can be sent to them via email or Facebook five or ten days later. Over the course of several months, Nijjer said that a good Beacon program enables the development of custom audiences and better analytics.

The Failure of ‘Gimmick Commerce’ Brands

Graphic from Recode

“Gimmick Commerce” is one way to look at the sites that entice people to buy things online via promotions, flash sales and subscriptions. Mostly, it represents things that people don’t need.
But it has almost totally failed, per Recode’s Jason Del Rey in a provocative piece this week. In the deals space, Groupon has pivoted to a marketplace focus (i.e. normal shopping) and is trading at just $3 a share. Living Social is publicly struggling and experimenting with new models, like card linked offers.

The other deal sites are gone or totally pivoted. Just yesterday, Nimble Commerce, the last of the major independent deal aggregators, announced it was selling out to BlackHawk Network, a leading gift card company.

Other “gimmick commerce” models have also failed to gain traction. The flash sales space is basically gone, with Fab, Gilt, Ziulily bowing out at fire sale prices, and One Kings Lane positioning itself to do the same. Del Rey concludes that none of these companies have been able to cut into the Amazon behemoth, which accounted for 50 percent of all ecommerce growth last year (although Amazon surely engages in its own Gimmick Commerce).

The only companies that are growing and safe from Amazon are the specialty subscription services. With the exception of some of the high loyalty food delivery companies (Blue Apron) and subscription razor companies (Dollar Shave) most of these probably aren’t keeping their customers.

It’s a big, brave thesis. Rey points to the difficulty of building new brands and creating consumer habits from scratch – and the never receding desire to buy everything from a single source. But it is kind of broad — I don’t know that all these companies should be lumped together. And it shouldn’t be inferred that the new technologies and features like big data analytics, buy buttons, card linking and targeted offers that act as a foundation for these sites are being rejected. They remain transformative and will probably account for a big percentage of the next generation of impulse buying, if not shopping altogether.

Restaurants Disintermediated by New Sites That Make and Deliver Food

There is a new front in the food delivery wars: food delivery companies that make and deliver their own food. Sites such as Blue Apron, Munchery and Sprig are focused on on disintermediating restaurants and the food delivery companies that rely on them. including GrubHub/Seamless, Yelp’s Eat 24, Groupon’s OrderUp and PostMates.

In a macro way, the restaurants are being made to realise they are only brands in a broader “food at home” category. As Business Week’s Brad Stone reports in a great new article, the only question is whether the new food prep and delivery companies will serve the food hot (like Sprig) or require that it be heated up (like Munchery).

Stone’s report focuses on Munchery, which now runs mega-kitchens with $50,000 industrial overs in San Francisco, LA, New York and Seattle. Munchery – a Y Combinator reject in 2012 now valued at over $300 million — makes about two dozen gourmet items every day, centrally directed by star chefs. The high volume of orders lets the food scale and means lower costs for consumers. Stone notes that a salmon dish that was $22 when first introduced, for instance, currently sells for $11, which seems to be the average price.

Munchery has also proved to be an activist in on demand labor issues facing many of the on demand companies. When Hilary Clinton recently visited, Stone notes that the CEO lobbied her on the need to find a middle ground between full time employees and part time workers. Munchery’s workers are all fulltime and enjoy full benefits. But a new classification between contractors and full-time hires wouldn’t require employers to shoulder the full burden of health and retirement benefits. It would also allow companies to employ more people to work a few hours a day around dinnertime.

Photo from Forbes

Is Groupon ‘Misunderstood’? It Probably is Under-Appreciated

Newly Elevated Groupon CEO Rich WIlliams

Groupon is “misunderstood”; people haven’t updated their view of Groupon as a full blown marketplace rather than a “daily deals” company; and it actually is “the unquestionable leader in local.” All this per newly-elevated CEO Rich Williams, in a public letter.

“We have unprecedented experience in local, and what we believe is the right vision and strategy to make our goal of becoming the daily habit in local a reality,” says Williams, who has held executive ranks with Groupon for four years. While the company is going through many changes, “there are some very important things that are staying 100% the same: our mission to connect local commerce; and our vision to build the daily habit for local commerce, the marketplace where people discover and save on amazing things to eat, see, do and buy in their neighborhood. “

In his letter, which was sent to the press/analyst community, Williams concedes past strategic errors; and promises to move away from a reliance on the high volume,“empty calories” of low margin electronics sales. He also promises new marketing efforts and shopping features that will attract “millions” of new customers. And while Groupon has closed down a number of international programs – this week closing down the Scandinavian countries — it will redouble its efforts on several of the remaining international markets, including Australia, France, Germany, Italy and the UK.

Williams candidly acknowledges that the company has brought a lot of its troubles onto itself. It has highlighted — and then de-emphasized — one strategic initiative after another. I’d like to hear more about the status of several initiatives, including offer personalization; the food delivery effort; the Breadcrumb loyalty and POS program; self serve deals; and the extended publisher network.

Groupon also has moved away from offering exciting and creative deals. Now, its inventory includes a number of predictable and/or shoddy goods. While the company claims to personalize deals for users, I haven’t seen it. (Not to be prudish, but I recently got an email promo with a lot of sex toys in it.) Moreover, some of the pre- discount values on the site are exaggerated.

So — write off Groupon? Definitely not. At the end of the day, we’re still looking at a very large, mobile-oriented marketplace with more than 500,000 items from one million merchants being marketed to nearly 50 million consumers members. That volume speaks for itself. And it is a unique offering, if not yet a blue chip one. Based on Williams’ note, they’ll keep working to get there.

Here are six highlights from Williams’ letter:

1) “Groupon is a misunderstood company. We’re misunderstood by analysts. We’re misunderstood by media. We’re misunderstood by consumers — both those who haven’t visited our site in awhile and those who’ve never purchased from us.”

2) “Too many people still think of Groupon as ‘that daily deal email company.’ The reality here is twofold: first, we’re a marketplace — and a big one — one with more than half a million deals in three different categories. Sure, email is still important, but more of our purchases come from on-site search than email, and more than half our purchases occur on mobile.”

3) “There’s more to our marketplace than deals, including an increasing number of market rate and low discount offers, and new ways to save time as well as money. They’re just in their early stages and we want to move faster.”

4) “MYTH: Groupon isn’t growing/Groupon is going out of business. We’ve definitely grown: since going public, we’ve grown billings and revenue by over 90%; we’ve had seven consecutive quarters of double-digit billings growth in North America; we’ve doubled our customers over the past five years; we’ve increased the number of deals on our platform by 500x since we went public in 2011.”

5) “MYTH: Groupon is bad for businesses. The vast majority of our deals (82% as of the last report) are breakeven or better on the deal itself (i.e., no overspend or cross-sell required). That is simply unheard of in high volume small business advertising and customer acquisition.”

6) “MYTH: No one can win in Local — There are a number of big companies — Amazon, Facebook, Google — who’ve tried and died in local….(but) We have sold nearly a billion Groupons life to date. Add to that our nearly 50 million active consumer and 1 million merchant customers to date and you have a lot of proof of the possibilities in local.”

Sneak Peek at BIA/Kelsey NEXT Show: 6 Things I’m Watching For

“End of Big” Author Nicco Mele Keynotes BIA/Kelsey NEXT Dec. 9-10

BIA/Kelsey’s December event has been local’s flagship, and always ahead of the curve in all of local’s iterations. It has been widely imitated, but never totally duplicated! I‘ve been producing it for a long time, but this year, handed it off in midstream. I’ll be moderating some great sessions, though, and the conference team has ended up with 52 hand-picked speakers, a Tech Expo and two full days of programming. Here are some of the things I’m most excited about:

1. The New Cut on Local and Community. Local’s still at the concept stage in a lot of areas. Why think small? Two leaders from USC’s groundbreaking Annenberg School (my alma mater) will point to the new directions in separate keynotes. First up is Nicco Mele, the author of The End of Big (2013), a tour de Force on “radical connectivity.” He’s also fresh from his stint as deputy publisher at The LA Times, where his team’s efforts to seize new initiatives in local had already produced major new revenue streams. He’ll have a lot to say about what’s going to work. Leading off Day 2 is Dr. Karen North, Director of Online Communities, a dynamic presenter who is focused on Millenial applications and behavior – you’ve heard, perhaps, these kids live on the phone?

2. Keynotes from Google and Facebook: The latest in local from the two dominators and trend setters in local. Danny Bernstein at Google is set to highlight its deep linking efforts (Google Now). He is sharing the stage with Button’s Chris Maddern and Local Seo Guide’s Andrew Shotland.

3. Big Thinking about MarTech: Big Data’s impact on local cuts many ways – analytics, leads, targeting, planning, But it’s only a subsegment of the broader “MarTech” movement. Those in the know attend Scott Brinker’s annual MarTech conference in Boston. Scott, who also runs ionactive, is going to focus on local and highlight what’s important and why for us at NEXT. He’ll be joined on stage by Surefire Social’s Chris Marentis.

4. The Mobile App-Driven Marketplace. The mantra is that it isn’t really about search right now, because Mobile apps are driving the marketplace. What’s that really mean for local? One of the best analysts I know is Mark Plakias, who has been running Orange’s think tank in Silicon Valley for several years. He’ll be joined by Quick.ly’s Paul Ryan and DialogTech’s Steve Griffith. This will be quite a session.

5. Local and The Internet of Things. We’ve been pondering iOT’s impact on local — when everything is linked, from transit cards to vending machines. So has the new venture, Instersection, which is a partnership from Google Ventures and former Bloomberg head and NYC Deputy Mayor Dan Doctoroff. CSO Dave Etherington will provide insights on what they are up to. He’ll be joined on stage by Cisco’s Andy Noronha.

6. Close Up on The New Local Marketplaces. We’ve been saying for a long time that local marketing has gone beyond advertising. Now it’s “closing the loop” with transaction data, offer targeting and complete behavioral profiles reshaping the game. Groupon’s Dan Roarty, Microsoft’s Neal Bernstein and MOGL’s Jon Carder share their insights. Cardlinx CEO Silvio Tavares will add data and help me run this session.

Haven’t got your ticket yet? I have a *little* influence and can get you $400 off. Please use this discount code: LOCALONLINER. You may register here.

Booze As a Digital, ‘Shop Local’ Story: Craft Spirits Exchange

A key part of the Shop Local movement in recent years has been sparked by the rise of Craft Beer, with many city and states dropping nuicense regulations inhibiting breweries from providing samples, selling food or selling take away bottles smaller than 22 ounces. At this point, the contribution of breweries, wine makers and craft spirts to local economies has been felt in hundreds of markets.

The role of digital media in promoting and selling local beer, wine and spirits has been a significant one, with social media rating products and creating buzz for products and events; directories pointing consumers in the right direction; and now, on demand services like Driz.ly delivering booze directly to your door (a fad, ok?)

One entrepreneur I’ve watched carefully over the years is Steve Gilberg, who created the Happy Hours website and then Facebook directory of bars and drinks, which partially inspired my creation of the Marketplaces research program for BIA/Kelsey; and then also created Wine Twits, a national happening of promoted wine with hundreds of local parties tweeting away.

Gilberg’s newest project is Craft Spirits Exchange, a website and app dedicated to promoting local craft spirits to craft enthusiasts around the U.S. He’s CMO for the Exchange, reporting to Luis Troccoli, a native New Yorker who was inspired to launch the exchange in 2013 when he moved to Florida and couldn’t get access or even news about his favorite spirits.

The Exchange is a spirits marketplace that combines bright editorial; more than 1,100 profiles of spirits products; community reviews; and marketing from local craft retailers. More than 40 states now allow direct shipping of spirits, acting as major contributors to local commerce. My own state, Oregon, has more than 60 spirits producers. Troccoli says a major role for the exchange has been to enable east coast consumers to buy west coast spirits, and vice versa.