Groupon To Stop Merchandise Sales And Concentrate On Experiences

Groupon To Stop Merchandise Sales

As it faces a competitive retail market, Groupon Inc. intends to discontinue its sale of merchandise by the close of 2020. The firm plans to move from its current deal-focused approach to concentrate on local experiences, such as local painting classes or wine-tasting dinners, as The Wall Street Journal reported.

At the conclusion of last year, Groupon said its customer base (excluding goods-only shoppers) was 35 million. In the past, the goods category provided better profit margins and brought shoppers to other offerings on its platform, but it had reportedly “become a drag on its business,” per the report. Last year, goods comprised approximately $1.12 billion in revenue, or just above half of the company’s total revenue.

Groupon reportedly looks to leave the goods category in North America by Q3 of this year, and worldwide by the close of the year.

The company’s shares fell 25 percent over extended trading on Tuesday (Feb. 18) after the firm reported Q4 results that fell short of estimates. Groupon registered revenue of $612 million for the quarter, short of the $709 million that analysts forecasted. The firm reported Q4 earnings of 7 cents per share, with the exclusion of some items, where analysts had forecasted 15 cents per share.

In separate news from September, Groupon joined forces with travel supplier and distributor connector DerbySoft to grow instant booking and to work with more hotels. The move paves the way for the Groupon Getaways travel business to work with more of the world’s leading hotel brands, while enabling it to access room availability, view nightly rates and make reservations directly. The tie-up also provides DerbySoft’s supply partners with access to Groupon’s 29 million North American customers, per an announcement at the time.

Louisa Balach, North America general manager of travel for Groupon, said in the announcement, “Partnering with DerbySoft furthers our goal of making experiential travel more accessible and bookable for consumers.”