Groupon Calls It Quits on Selling Goods, Will Refocus on 'Experiences'

Illustration for article titled Groupon Calls It Quits on Selling Goods, Will Refocus on Experiences
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After recent earnings fell way short of expectations and caused its stock to fall a record 38 percent, Groupon has announced that it will stop selling physical goods and merchandise and will refocus the company around providing local experiences.

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For most people, Groupon is typically the place you go if you’re looking for a discount on your next spa day or a deal on your next meal. However, alongside markdowns for manicures, Groupon Goods also sold physical products, which typically manifested in listings for things like reduced price clothing, USB chargers, and even iPads.

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Unfortunately, thanks to stiff competition from rivals like Wish, that unfocused strategy isn’t working. In a letter to shareholders Groupon CEO Rich Williams told investors that he was “incredibly disappointed with our 2019 performance” and that Groupon will be “taking immediate and decisive action to return the company to growth.”

Williams also said that “Goods has outlived its role as a business driver and has become a significant drag,” on profitability with Groupon planning to phase out Groupon Goods by the end of the year.

Going forward, Groupon is looking to pivot away from simply being a place to find deals to one that will help people discover local experiences. Williams said Groupon wants to be “top of mind when our customers are looking for the best things to do around them, when they need something to do with their kids on the weekend or for when they’re planning date night.”

Groupon’s upcoming pivot will also include a change in marketing strategy and even a possible relaunch once the company finally winds down its Goods division. Unfortunately, similar to companies like Overstock, Groupon’s biggest hurdle may be overcoming its name, which tends to reminds people of the company’s origins that came from selling discounts in bulk.

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And with its Goods division responsible for around half of Groupon’s $1.12 billion revenue in 2019, Groupon better hope that doubling down on selling experiences is the right move forward.

Williams said, “our strategy is simple: turn Groupon into THE local experiences marketplace.” Well, good luck with that.

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Senior reporter at Gizmodo, formerly Tom's Guide and Laptop Mag. Was an archery instructor and a penguin trainer before that.

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DISCUSSION

I spent a couple of years working at Groupon, and quite frankly at this point they’re surviving by merit of being the last company standing in the local deals market. Amazon failed at this. LivingSocial failed at this (and got absorbed into Groupon as little more than an alternative to folding.)  A fair number of smaller competitors failed at this.  Groupon has been up for sale for a couple of years now with no takers.  It seems to me that they’re chasing a market that just doesn’t exist.  I’d like to be proven wrong (I still own stock that’s all but worthless now) but at this point I’m guessing they’ll be out of business within 18 months.