Groupon keeps pivoting to a new mobile-based e-commerce business model, but there are a lot of obstacles to morphing into a top competitor in a space that is attracting many other significant brands.
The Chicago-based company, of course, was the pioneer in the business of offering online deals at local merchants, and founder Andrew Mason built Groupon into the giant of that industry and a $20-a-share IPO nearly two years ago. Then Groupon got competition in that space and merchantsbegan grousing that the architecture of the Groupon deals was far better for consumers than for them. Mason was sacked in February and now board members are looking for a permanent CEO.
In the meantime, investors and employees alike have been heartened that Groupon not only has shored up its local-deals business but also is in hard pursuit of a big chunk of the mobile-shopping business, hoping to become the first big e-commerce player to get the majority of its revenue from mobile.
"We think we have a great opportunity to be one of those places where people start shopping when they pull out their phone," Rich Williams, Groupon's senior vice president of marketing, told Crain's Chicago Business.
The company is building its Groupon Goods business—revenue more than doubled in the past year, the magazine said—as a natural extension of its local-deals business, outsourcing warehousing and shipping as it tries to build the tiny gross margins of that part of its business.
There are plenty of challenges, though, including other competitors that have eyed mobile such as Amazon and eBay as well as Sears, Best Buy and other traditional retailers. The fact that Groupon ultimately under-delivered in its core business under Mason doesn't help the reality that its foray into mobile e-commerce will be much more complicated, especially for investors. Interim company management including Chairman Eric Lefkofsky and board member Ted Leonsis will have a chance to explain their strategy at Groupon's annual meeting in Chicago on Thursday.
Among other things, they'll insist, as Williams did to Crain's Chicago Business, that Groupon has plenty of room to grow in the mobile business. "There's some opportunity there," he said, "that's not fully explored yet."
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