At a Glance
Flexible work environment
Rapid growth has created instability and dissatisfaction
Increasing competition from rival firms
Groupon's rapid growth has made it one of the best-known companies on the web, but has also brought growing pains and questions about the long-term viability of its business model.
About Groupon, Inc.
Groupon taps into the power of collective buying. The company helps businesses promote their products by offering consumers a unique way to save on things like food and drink, health and fitness activities, and live entertainment. By purchasing a local business' goods and services through Groupon's e-commerce platform, customers receive cash back on credit cards linked to their Groupon account. Groupon also generates more than half its revenue selling merchandise, such as electronics, toys, apparel, and household items, directly to customers. In addition, its travel segment offers deals on hotels, airfare, and car rentals. Customers access the company's platform through mobile apps and websites, which primarily consist of localized groupon.com sites throughout some 15 countries, primarily in North America and EMEA. Established in 2008, Groupon has some 48 million customers, including about 17.6 million international customers. North America is Groupon's largest market, accounting for about 60% of total sales.
Groupon generates about 55% of its revenue selling merchandise inventory directly to customers and 45% selling vouchers and cash-back offerings from third-party merchants through its online local marketplaces. The company offers goods and services across three primary categories: Groupon Goods (Goods), Local Deals (Local), and Groupon Getaways (Travel).
Goods offers deals on merchandise across multiple product lines, including electronics, sporting goods, jewelry, toys, household items, and apparel. The sales of Groupon Goods accounts for around 55% of total revenue.
Local includes offerings from local and national merchants. It comprises multiple subcategories, including events and activities, beauty and spa, health and fitness, food and drink, home and garden, and automotive. It also offers deals on concerts, sports, theater, and other live entertainment events. Groupon Local sales account for around 40% of total revenue.
Through its Travel segment (about 5%), Groupon features travel offers at both discounted and market rates, including hotels, airfare, and package deals, covering both domestic and international travel.
Headquartered in Chicago, Groupon has reduced its global footprint from more than 45 countries to 15 core countries it believes have the greatest growth potential. North America is Groupon's largest market, accounting for about 60% of net sales. International markets, primarily the EMEA region, account for the remaining 40%.
Its North American merchant sales representatives and support staff are mostly based at offices in Chicago and Phoenix. It also has two US data centers in California and one in Ireland.
Sales and Marketing
Groupon's customers access the company's platform through mobile apps and websites. The company uses a variety of marketing channels to make customers aware of its deal offerings, including search engines, email, affiliate channels, display advertising, and offline marketing.
The company's sales force consists of more than 2,200 sales representative and sales support staff.
Groupon is increasing its marketing spend, which has hovered around $400 million, and establishing a greater presence on social media and investing in media advertising such as YouTube.
Groupon's revenue has been trending downward since 2016 with sales of $2.6 billion in 2018, a 7% decrease from $2.8 billion in 2017.
In 2018, North America saw a more than $500 million drop in sales due to a decline in each of its Local, Goods, and Travel categories. The company is shifting from traditional voucher offerings with food and drink merchants to voucherless cash-back offerings. The move is negatively impacting sales in the short term, but the company believes this model will drive long-term profit growth. The International segment increased by $61 million primarily from favorable currency exchange rates compared with the previous year.
Net income plummeted to an $11.1 million loss in 2018 compared with a profit of $14.0 million in 2017, attributed to more than $20 million in negative foreign currency translation and interest expense related to its convertible notes.
Cash at the end of fiscal 2018 was $844.7 million, a decrease of $40.8 million from the prior year. Cash from operations contributed $190.9 million to the coffers, while investing activities used $136.0 million, including $58.1 million for the acquisition of the remaining 80% of UK-based Cloud Savings Company. Financing activities used another $84.4 million for loan payments.
Groupon considers 2018 a transition year when the company began moving away from the daily deal and voucher system, where consumers must provide a voucher—either physical or digital—to the merchant to receive discounts, to a system that uses offers linked to consumers' credit cards (customers receive cash back after the purchase). Other voucherless initiatives include purchasing tickets and booking appointments directly with brands on the Groupon platform. Its Groupon Plus rewards program, which offers cash back rewards to repeat customers of certain merchants, will be rebranded.
The company is expanding beyond local businesses and is extending its platform to other partners and major national brands to allow for a wider range of offers that it hopes will drive growth and profits. New partners, such as AMC Theaters and TripAdvisor, are joining Groupon for experiential offerings. Groupon is also working to identify new distribution channels.
Groupon's fastest-growing areas are in its international markets. To drive international expansion, the company is concentrating on Europe, the Middle East, and Africa. It plans to increase investments in marketing and marketing analytics, including more technology resources to enhance its product and service offerings in those regions.
In 2019, Groupon plans to tap into social media and invest in YouTube and cinema advertising to boost awareness of its new marketplace model and offerings.
Mergers and Acquisitions
Groupon has sustained slow-to-marginal growth by acquiring competitors and purchasing businesses with expertise in online and mobile applications. In 2018, the company acquired Cloud Savings Company, Ltd., the parent company of the UK's discount code platform Vouchercloud and brand loyalty provider Giftcloud, for $65 million. The company is counting on Vouchercloud to accelerate its efforts in broadening its offerings, specifically in international markets. Giftcloud adds customer loyalty programs with large retailers as well as local merchants.
Groupon was launched in 2008 by Andrew Mason as a site dedicated to promoting local businesses by offering deals for a limited time. The world's first Groupon was a deal for Motel Bar, located just downstairs from the Groupon office in Chicago. The company began running deals for increasingly larger businesses in Chicago, later expanding to other cities.
With the help of features on the TODAY Show and press from Ellen Degeneres and The New York Times, the company continued to grow and went public in 2011. In 2016, it acquired rival daily deal site, LivingSocial.
In 2019, the company began moving away from its daily deal voucher model to a more diversified e-commerce marketplace with products and services, along with discounts or special offers, linked to consumers' credit cards.
600 W CHICAGO AVE STE 400
Chicago, IL 60654-2067
Phone: 1 (312) 334-1579
Employer Type: Publicly Owned
Stock Symbol: GRPN
Stock Exchange: , NASDAQ
Area Sales Manager: Abigale James
Chairman: Eric P. Lefkofsky
CEO: Rich Williams
Employees (This Location): 1,500
Employees (All Locations): 6,576
Palo Alto, CA