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Can E-Commerce Save Groupon?

A stellar holiday weekend was a step in the right direction for the daily-deals site. But don't call it a comeback just yet.
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There was much speculation over whether Groupon would bounce back after CEO Andrew Mason was pushed out of the daily-deals company in July. Over the summer that seemed likely, as Groupon’s stock doubled since July 2012 and shares more than quadrupled since tanking last November. 

The trend seemed to continue over the four-day Thanksgiving weekend, when Groupon enjoyed its best holiday retail sales ever, thanks to Black Friday and Cyber Monday. Sales rose nearly 30 percent from the same period the previous year, reports Seeking Alpha, and more than half those transactions came from mobile. 

More than 50 million people in 43 countries have downloaded Groupon's new app, which the company unveiled in November. But with its stock well below its November 2011 IPO price of $20, the jury is still out on whether transforming itself into an online marketplace will be its saving grace.

Since becoming chief executive in July, Eric Lefkofsky has said he wants to transition Groupon from a daily-deals company into an e-commerce company. That means reducing reliance on e-mail blasts and building a repository of offers for browsing on mobile and desktop platforms. Lefkofsky also says he hopes to elevate Groupon's offers from teeth whitening coupons and laser hair removal to high-end restaurants, household products, and vacations. 

"We're trying to convey this basic message, which is we want Groupon to be the place you start with when you want to buy anything, anywhere, any time," Lefkofsky told The Los Angeles Times in August.

By some measures, the company's efforts to realize that goal are working. A Groupon spokesperson told Inc. its number of active daily deals grew to 65,000 in North America in the third quarter of this year, compared with 54,000 in the second quarter. And the company says it has made strides in improving its search and personalization features. The launch of a freebies market, where consumers can snap up giveaways, samples, and coupons, has also generated much-needed buzz.

These are bold moves, but Forrester analyst Sucharita Mulpuru isn’t convinced they're helping, despite those holiday sales. During this period, it's expected that more people will open their e-mails and pick up their phones, she says. The question for Groupon, as for any retailer, is whether it can keep those customers coming back.

“One good Thanksgiving Day won't turn around anyone's business--everyone in e-commerce had a great Thanksgiving week this year," she says. "They need to find great deals and continue generating value for customers every day for the rest of their future to have a true turnaround.” 

Last updated: Dec 10, 2013

JILL KRASNY | Staff Writer

Jill Krasny is a staff writer for Inc. magazine, where she covers the intersection of entertainment and startups. Prior to Inc., she was a writer for MTV and Esquire and an editor at TheStreet. She is a graduate of the University of Southern California with a degree in communication. She lives in New York City.




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