Tag Archives: Groupon

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.

Big Thinking/Re-Thinking Groupon: Local Onliner talks with CEO Rich Williams

Groupon is at a crossroads. The company remains a deals leader with a huge volume of customers (25 million in the US; 50 million worldwide) and one million merchants. But the company is seen as yesterday’s news by many, even as it keeps doing solid business and pivots from email to an always on, discovery-based marketplace.

New CEO Rich Williams has made it a priority to revive Groupon’s reputation and position within the industry. Last week, he released a letter defending the company’s position as a local, goods and travel leader. Today, he engaged Local Onliner in a wide-ranging discussion.

Williams, who previously held several senior-level positions at Groupon, notes that amidst all the iPad deals and travel offers, local remains Groupon’s “core mission,” as shoppers look for a one stop for all their goods and local discovery. “We’re doubling down (on local) in every way,” says Williams. Indeed, Groupon’s “people investment” to support local deals constitutes more than half of its 10,0000 employees. Local is so fragmented that “merchants need a higher touch model,” he says. “We make that big investment to help them grow their business.”

A lot of the effort will be to keep driving local discovery. “That’s core to who we are,” says Williams. Sixty percent of Groupon restaurant purchases, for instance, were sold to people who “had never heard of the business they ended up going to.”

As for the life span of the deals industry, Williams feels it is actually “super early” and that deals will remain a major driver for all commerce. “We are not running away from deals,” he emphasizes. It’s an exciting part of marketing that lets people feel like “they have won something.”

The important thing is not to be locked into stale business models. “Let’s be honest: how do you redeem a coupon today?” asks Williams. “Is it the same as 2013? Why? It doesn’t need to be that way.”

The goal, over time, is to reduce redemption friction entirely…and make it more seamless. Merchants will be able to have different ways to create offers for their customers,” says Williams. “They’ll work with different economic models.”

What will that look like? Instead of a general $10 for $20 spend deal, “you might see 10 percent off the bill, or take 20 percent off the bill” if you buy a $5 voucher, says Williams. Or you may claim offers where you may get a free desert just for redeeming a Groupon. “We see different kinds of value creation coming on the Groupon platform,” he says.

Card Linked Offers may also be part of it – a route that rival Living Social has taken with its Restaurants Plus effort in several cities. As luck would have it, I got a consumer survey sent to me last week asking if I would be receptive to a Groupon Card Linked Offer feature. It would allow me to take 15 percent off charges at participating merchants for any registered credit card and receive bonus points…all without having to mention Groupon.

Williams says it is premature to say that Groupon is going to launch the Card Linked Offers feature – it was just research. But he acknowledges there have been lots of conversations with card issuers.

Beyond the question whether deals will continue to drive Groupon in a marketplace, however, is the question of how to leverage the new “push vs. pull” dynamics in a mobile environment. And also add value to businesses with service features, such as booking/scheduling, point of sales and food delivery. The latter is a special sweet spot for Groupon, stresses Williams.

Booking and reservations have also taken off in some markets, he says. There are 1,500 to 2,000 health and beauty salons in Chicago using Groupon for booking and reservations.

Still, Willliams acknowledges that the company is late on some of these features, or narrowly-positioned. One option will be to open the platform for partners – especially in cases where merchants already have a solution. In some cases, there may also be a clearer shot at adding services in international markets that have less competition.

Groupon Joins Food Delivery Wars

Groupon today announced it would join the online food delivery space, acquiring Baltimore-based OrderUp, which has O&O and affiliated delivery service in 40 markets. Most of the markets are college towns, which is a strongpoint for food delivery.

As Crain’s Chicago Business reports, OrderUp — Uber for your Burrito — raised $7 million in 2014 from investors that included former Living Social CEO Tim O’Shaughnessy, who had been an archrival of Groupon. The service was founded in 2009 and has a strong orientation towards buying existing food delivery services, rebranding them and then reselling them as franchises.

Groupon’s move extends its relationships with restaurants and other food providers. It is consistent with its efforts to migrate these advertisers from occasional deals into its “always on” marketplace, where it enjoys a well-rounded relationship based on the provision of offers, advertising, analytics, payments and Point of Sales.

It had been reported in April that Groupon was seeking to divest its Breadcrumb analytics, payments and Point of Sales business to a competitor such as Square. The acquisition of OrderUp could be less synergistic if Breadcrumb was actually divested.

With the OrderUp acquisition, Groupon will compete against other, more established food delivery companies, including Grubhub/Seamless, Yelp’s Eat24 and Delivery.com. Rather than focusing on winning market share against these players, it seems more likely that Groupon will initially seek incremental sales that support its broader initiatives.

Groupon Re-thinks its Ambitious SMB Platform

Groupon is apparently thinking hard about dismantling its ambitious SMB platform, and refocusing on its core strengths in daily deals, goods and travel. Reports have come out saying that Groupon is offering to sell its Breadcrumb POS platform, which had been rebranded as Gnome; and also sell its interest in Serviz, a Local On Demand Economy home services company that has been developed as ClubLocal by former ReachLocal CEO Zorik Gordon. Groupon has also been in talks to cash in on T-Mon, the South Korean ecommerce service that it bought last year from Living Social for $260 Million, but could now been seen as a cash cow that could allow Groupon to invest in other areas.

According to Bloomberg Business Week, Piper Jaffray analyst Gene Munster thinks that the Breadcrumb part of Gnome could fetch $100 million, and that Groupon’s stake in Serviz could be worth $30 million. T-Mon, which is seen as an ecommerce winner in Asia, could ultimately get as much as $800 million. Groupon’s apparent decision to explore the sale of Gnome is the most interesting to us. A report in Re-Code said that executives casually offered to sell at least a portion of it to Square.

In developing Gnome, which has been built on top of its June 2012 purchase of Breadcrumb, Groupon assessed its widespread, international merchant base and concluded it could reinforce and upsell that base and position itself as a global ecommerce giant. It would do so via a compelling package of highly discounted point of sales devices, payment services merchant analytics and strategically targeted offers to customers.

The investment in Serviz – which gave the greenlight to Gordon’s team to continue developing a service that was not going to go further at ReachLocal – was also seen as strategic as Groupon looked for more and more ways to connect and broaden the local marketplaces. Coincidentallly, it looks like Groupon is giving up on having a piece of the home services market just as Amazon and Google are diving in.

Is Groupon giving up too early? We’ve been impressed with the capabilities of the Gnome platform and the strategic vision behind it. The Serviz product is also impressive, although perhaps too rarified for Groupon, as it aims for higher ticket repairs and services. And separately, T-Mon is going to require enormous investments to grow and maintain its market share in a business that has come to not only include deals but also ecommerce, fashion and services.

The bottom line here, however, is that Groupon may have concluded that its merchant base sees it as a 3rd, 4th or 5th choice for this kind of activity – rather than as a substitute for blue chip and diverse players such as American Express, VeriFone, First Data and Salesforce . While Groupon can always work to keep repositioning itself, it currently seems most secure as a provider of discounted goods and deals that it continues to mold into an always on marketplace.

Groupon Seeks Industry Partners; Wants to Close the Loop for Merchants

Forty percent of merchants run some kind of “special” sales or promotions according to a Groupon survey of 25,000+ merchants. Half of the specials are offline, “trapped” on chalkboards and menus, noted Groupon VP of Marketplacest Dan Roarty, who was speaking at Money2020. “There is no aggregate source for them.”

Roarty said that the company, as part of its Local Operating System, has been working “to close the loop” via its G.Nome payments and loyalty system. Among other things, G. Nome provides a seamless redemption of deals, specials, coupons; automatic requests to leave feedback; and “automatic goodies” for being a great customer.

Many other elements are required to really close the loop, however, said Roarty. Groupon is currently soliciting help from partners who can enhance its efforts to provide payments, Point of Sales info, Geo Fencing, Wifi and Beacons. “Groupon can uniquely blend all these signals and put customers in control,” said Roarty.

All Roads Lead to Groceries: Groupon Adds ‘Snap’ Loyalty Program

When it comes to local commerce and loyalty programs, all roads lead to groceries. That’s the feeling of key companies in the space, including WalMart, Amazon, Google and eBay. Groupon this week announced Snap, a grocery coupon and loyalty program that gets it into groceries in a more meaningful way than prior efforts to go in via daily deals – where the discounts were not sustainable in an industry that is more dependent on “cents off” than “55 percent” off.

As reported in Chicago Business, Snap replaces Freebies, a coupon program launched in 2013 that has attracted 30,000 coupons from 7,000 retailers. Users of Snap receive offers and get money back after they aggregate $20 of discounts — if they upload photos of receipts showing the goods that were promoted. (This validation effort could prove a little klugey.)

While a robust grocery and delivery program has its own value, it may also lead to a key gateway into women shoppers; strong user behavior analytics; and peripheral deliveries or transactions with other goods such as electronics, etc. Groceries are also used more often than other key anchor promotion verticals, such as restaurants and services. Google similarly entered the grocery coupon business last year with the rollout of Zavers.

In Groupon’s case, the Snap program also supports its broader Marketplace effort, which allows advertisers to participate in many different channels (deals, coupons, ads). Seventy-five percent of Groupon business advertisers currently use Groupon for at least one feature in addition to the one-off deals. One of the key issues with Marketplace has been to provide a volume of listings so that searchers will always find things when they search for them. Currently, 9 percent of Groupon’s transactions emanate from Marketplace.

The Snap program does not get Groupon into dedicated home delivery — yet — but it does build out the marketplace, and could serve as an effective building block.

Groupon’s Sean Smyth on the new ‘Partner Network’

Groupon has been pushing hard to upgrade its merchant base from one-time partners to permanent clients with monthly sales goals. The latest initiative? A “Partner Network” for publishers willing to highlight Groupon deals in return for a piece of the action (10-12 percent for local deals, and lower amounts for Getaways and Goods). Partners get access to Groupon’s Open APIs and full reporting.

The way Groupon sees The Net is as “the first proprietary local e-commerce affiliate marketing platform designed to help online publishers better monetize their online presence.” Initial publishers include a number of mid-level traffic sites, including Ebates, Upromise by Sallie Mae, Dealnews, Fat Wallet, ShopAtHome.com and Slickdeals.net.

Groupon has previously worked with newspapers to flesh out their deals network. There are also other deals networks that let partners pick and choose deals, such as Local Offer Network, Analog Analytics and 8Coupons. But VP of Global Partner Marketing Sean Smyth says the primary difference here is that the syndication of deals represents a Groupon-branded experience. It’s also integrated throughout Groupon’s international marketplace, which now includes 30 countries.

Smyth says the Network represents a “pull” strategy with many opportunities for larger media companies, as well as small publishers, such as bloggers. “It is one common API for everyone to go to,” he notes It also enables deals to be retargeted. Consumers might pick up a deal on a restaurant blog, for instance, after ignoring it the first time on Groupon.

“We are using our data for 10,000 partners today,” says Smyth. “Next year, we’ll have 100,000.”