Groupon has made some pretty big strides in the few years of its existence, having accumulated nearly 70 million downloads of its app, which supports daily deals and coupons. It added 9 million in just the last quarter alone.
But it also is adjusting its growth strategy somewhat, narrowing its focus on international markets where the company believes it can succeed. As such, one of its latest moves has been to limit its future investments in China.
“China is a market with extreme competition, where a committed local partner is essential in order to thrive,” Eric Lefkofsky, Groupon CEO, told analysts during a recent conference call to discuss 2013 fourth-quarter earnings. And for that reason, the company decided to write off its minority investment in FTuan, a top deals site in China.
Among the company’s other strategic initiatives, mobile hit record growth during the quarter. Groupon’s worldwide mobile business, measured by transactions, increased significantly to nearly 50% of total volume in December, more than a 10% gain in just 90 days, Lefkofsky said. Of the 9 million app downloads, more than 80% were organic, he said.
“We are seeing an acceleration of mobile adoption, even at our already high levels,” Lefkofsky said. “While mobile purchasers are more engaged and tend to buy more than non-mobile purchasers, on average it takes almost 30% more time to get an Apple new user to make their first purchase. So mobile users are worth more, but take longer to activate, which means we have a growing pool of potential untapped demand among people who have downloaded our app.”
App Uploads Push
To try to boost mobile activations, Groupon has begun to shift a significant portion of its marketing spend toward driving app downloads instead of acquiring email subscribers.
Groupon also acknowledges that “local” is at its core. So to win in mobile, it has to win in local, “as mobile and local are inherently connected,” Lefkofsky said. While the company has a significant advantage in local commerce given its scale, it must strive to deliver an experience customers can’t live without, so it remains focused on various key areas.
First, it is targeting the best merchants to choose Groupon as the platform they want to use to promote their goods and services. As part of that effort the company last year expanded its full marketplace, which helped it get more than140,000 deals on its platform. This year, Groupon is increasing its focus on quality to recruit top merchants, Lefkofsky said.
Another goal is to ensure an amazing experience every time customers use Groupon. “We still have too many customers that have a suboptimal experience because they forget to use their Groupon,” Lefkofsky said. “We believe that unused Groupons are a drag on people’s willingness to buy more local deals from us.”
Faster Redemption Through Pull
To solve this problem, Groupon is working to simplify getting deals and encouraging use of Pull, its marketplace of deals through which people may buy and redeem in real time.
“We believe the key to a seamless experience lies in having every merchant plugged into Groupon at all times, accessing our hundreds of millions of subscribers, largely through mobile, and creating a local commerce platform that truly connects the offline world to the online,” Lefkofsky said. “We’re currently testing a new merchant technology that does exactly this right now, and while it’s early days, we believe it can be transformative.”
Despite the continued progress the company has made to reduce its reliance on direct e-mail, it has not yet created enough awareness in the market around Pull, Lefkofsky conceded. “The majority of our customers in North America still have no idea they can come to Groupon and search among our 80,000 deals in real time,” he said. “For Pull to gain awareness, we need to fundamentally shift our consumers’ behavior. We need them to think about Groupon every time they have the need, every time they pull their phone out, looking to buy something.”