Groupon Taps Gifting Opportunity to Drive Spending Amid Cutbacks

As consumers splurge on gifts in spite of other budgetary cutbacks, Groupon is looking to capture this lucrative opportunity.

The eCommerce marketplace shared on a call with analysts discussing its fourth-quarter and full-year 2023 financial results Friday (March 15) that, amid revenue declines, the company is targeting consumers’ gift spending to drive increases going forward.

Interim CEO Dusan Senkypl noted that the first version of the company’s gifting offering drove a 50% year-over-year rise in gift ordering in December.

“Over time, I believe that gifting can become a big business for us and Groupon can become a leading destination for last-minute giftable experiences,” Senkypl said.

Consumers spend significant amounts on gifts even at times when they are feeling financial pressures. The November report “The Credit Economy: How Consumers Are Approaching Holiday Spending and Travel,” a PYMNTS Intelligence and i2c collaboration, found that, 94% of holiday shoppers said they were taking action to make sure they would not have to cut back on gifts.

This continued engagement in gifting comes at a time when consumers are cutting back on other kinds of purchases. The recent February/March PYMNTS Intelligence report, “New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck,” finds that 56% of high-income, 66% of middle-income and 69% of low-income shoppers said they have cut down on nonessential spending in the last year due to retail product price increases.

Looking ahead, Groupon aims to enhance its gifting business through marketing, especially in the U.S., as well as through improving its gifting features on both its legacy platform and the new front-end, leveraging insights gained to refine its offerings. Additionally, the company is working with merchants to help them showcase giftable products.

Across the markets in which the company operates, gifting can be anywhere between 5% and 20% of total orders.

Additionally, the platform is also looking to drive conversion by improving the checkout experiences, reducing cart abandonments.

“One area of focus for us has been the checkout process, where we see many opportunities to improve the experience for customers who have made it all the way through our funnel and added items to their cart,” Chief Financial Officer Jiri Ponrt said. “This includes promoting some payment options ahead of others depending on local customer preferences.”

Cart abandonments are a significant challenge for eCommerce marketplaces. The PYMNTS Intelligence report “How Preferred Payment Availability Can Reduce Cart Abandonment,” which drew from a survey of more than 3,500 U.S. consumers, found that shoppers abandoned shopping carts on digital marketplaces an average of seven times in the last 30 days

Plus, checkout is a key consideration for many consumers. The PYMNTS Intelligence report “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces,” created in collaboration with Adobe, which drew from a survey of more than 3,500 U.S. consumers, found that 50% of shoppers said that they consider how easy the checkout process is when selecting a digital merchant.

As Groupon charts its course forward amid evolving consumer behaviors and spending patterns, the focus on gifting emerges as a promising avenue for growth, as does its investment in improving the checkout experience.