Groupon Goods sales grow 14% in the first quarter

May 6, 2015 09:04 AM

While Groupon Inc.’s overall revenue only inched up 3% in the first quarter, Groupon Goods, the company’s merchandise division, grew nearly 14%. Groupon Goods is No. 30 in the Internet Retailer 2015 Top 500 Guide.

Groupon made its name selling discount vouchers for restaurants, spas and entertainment venues via marketing emails, but its physical goods sales accounted for roughly 55% of its overall revenue during the quarter. And as its physical goods sales have grown, Groupon's business model for selling those items has changed, said Eric Lefkofsky, Groupon’s CEO, during a conference call with analysts.

"As the business has grown into a multibillion dollar global marketplace, we are now in a position to turn our focus to expanding supply through a number of distribution channels," he said. "As we remove our self-imposed constraints of moving inventory largely to our own fulfillment centers, we intend to migrate more of our Goods business to being fulfilled by closely managed network of third-parties that ship items directly to our customers. This will allow us to add far more items to our marketplace at a higher margin and with strong customer experience much like our international marketplace where greater percentage of our business is third-party."

Groupon has been increasingly focused on building an online marketplace.  

“We are now fully in the midst of the second stage of our company’s lifecycle, having involved from our daily-deal email routes into a full-scale local commerce marketplace,” Lefkofsky said.

However, that marketplace model is still evolving, he said. "We need to enable merchants to populate our marketplace with amazing inventory and this includes both more and better deals, as well as market rate inventory that we can leverage to create a thriving real time local commerce marketplace... Our goal is to more than double the number of active deals in our site over the next year to ensure we are always in stock in our top categories and top markets. To date, we’ve had a one-size-fits-all approach when it comes to merchants and overtime we’ve come to realize that it’s too limited." That's why Groupon recently rolled out merchant pages that enable a Groupon storefront.

Groupon also recently announced it agreed to sell a controlling stake in Ticket Monster, its South Korean e-commerce business, to a partnership formed by private equity firms KKR & Co. L.P. and Anchor Equity Partners.

For the first quarter ended March 31, Groupon reported:

  • Revenue of $750.4 million, up 3.0% from $728.4 million in the same period a year earlier.
  • North American revenue of $480.0 million up 11.3% from $431.1 million
  • International sales of $270.4 million, down 9.0% from $297.3 million
  • Revenue for Groupon Goods of $415.5 million, a 13.8% increase from $365.0 million
  • A net loss of $14.3 million compared with a year-ago loss of $37.8 million
  • Gross billings, which reflects the total amount consumers paid for Groupon vouchers, excluding applicable taxes and refunds, stood at $1.552 billion, a 2.0% increase from $1.521 billion.

Groupon is one of three retailers that is a finalist in two Internet Retailer Excellence Awards’categories. Groupon faces off against Inc., QVC Group and Target Corp. for the Mobile Commerce Award and Dollar Shave Club, Etailz Inc., Choxi and Warby Parker for the E-Retail Growth Award. The awards will be presented the evening of Wednesday, June 3, at a gala banquet in Chicago at IRCE 2015.





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