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TMCNet:  Groupon plans to reinvent itself as online marketplace

[August 19, 2014]

Groupon plans to reinvent itself as online marketplace

(Guardian (UK) Via Acquire Media NewsEdge) Groupon has overhauled its UK website as it steps up efforts to shake off its past as king of the internet "daily deal" and reinvent itself as an online marketplace.

"It's not just run-of-the-mill teeth-whitening and massage [offers] like there used to be," said Tamer Tamar, senior vice-president of Groupon's European division, of the website's relaunch. "The number and variety of deals have grown rapidly." Recent popular offers, he said, included after-hours tours of the Harry Potter sets at Warner Bros studios in Hertfordshire, and Starbucks discount vouchers.

The website, which launched in the UK four years ago, has added holidays as well as heavily discounted clothing, household goods and consumer electronics to its repertoire in a bid to revive its relationship with customers - whose enthusiasm soon waned for emails bombarding them with offers of cut-price carpet cleaning and blow-dries.

Today, the eclectic retail offers on Groupon's UK site take in men's loafers, tubs of Haribo sweets and 4kg (8.8lb) legs of serrano ham (complete with stands).

The company's goal is to get bargain-hunting shoppers to browse deals regularly, rather than responding to emails.

"Groupon remains the market leader in the daily deals space, but it has huge challenges," said Ian Maude, online analyst at Enders Analysis. "First, too many of the 'push' emails it sends out are irrelevant - the brand still has an image problem because of this. Second, the move to marketplace 'pull' sales opens up a much bigger market opportunity, but puts Groupon in direct competition with some of the biggest, most successful retailers on the planet, such as Amazon. Third, it's still losing money." Groupon investors have been on a rollercoaster ride since the company floated in New York in 2011. The initial success of the novel daily deals idea fuelled stratospheric sales growth and propelled the shares to $26 (then pounds 16), but its ensuing disappointing financial performance - it is expected to be loss-making this year - means the shares now change hands for close to $6.

The company's setbacks culminated in the ousting of its controversial chief executive and founder, Andrew Mason, in 2013.

The most recent figures point to an improving trend at Groupon, with chief executive Eric Lefkofsky describing the three months to 30 June as a "record quarter" as gross billings (the total value of all the deals sold) surged by almost 30% as the company circulated 240,000 deals. Groupon's revenues (what it keeps after paying merchants) rose 23% to $751.6m, with the division that covers Europe, the Middle East and Asia (EMEA) reporting growth of 42%.

Today Groupon has 53.2 million users, about 5 million of whom are in the UK, according to June data from comScore, which tracks internet traffic to websites.

The design tweaks to the website are supposed to make it easier to browse the site's thousands of listed deals. Groupon has also updated its iPhone and Android apps to include a tab that lets customers see deals available in their area.

"As a marketplace, Groupon is now competing with well established brands - and that's super-competitive," said Maude. "From the outside, it looks like they are experimenting. They have moved quite a long way from the original idea, but have not found the magic source just yet." Captions: Gringotts Bank goblin masks from Harry Potter films at Warner Bros studios - one of Groupon's most popular offers is a tour of the sets Photograph: Dan Kitwood/Getty (c) 2014 Guardian Newspapers Limited.

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