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Who will fix Groupon’s strategy? March 1, 2013

Posted by David Card in Uncategorized.
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Firing Groupon CEO Andrew Mason was almost certainly necessary, as the once highflying social commerce giant’s strategy is seriously misguided. “Social commerce” is a misnomer for Groupon’s core daily deals business. Daily deals should be part of a marketing services portfolio that a Groupon – or a Google – sells to local merchants. That’s what Groupon’s core “competency” is: a huge local salesforce with connections to small businesses and big companies that target locally.

Instead, Groupon is trying to be a retailer and sell retail infrastructure technology to small local businesses. Some merchants could see those offerings as competitive with their own. And neither of the newer initiatives will come anywhere near Groupon’s original high-margin deal business. I suppose, if Groupon were really a technology company rather than a sales organization, it could leverage big data shopping and consumer interest data across those three businesses. But other than some marginal improvement in deal conversion in U.S. markets, Groupon has shown no evidence of data analysis skills or technical know-how.

Social commerce services like daily deals and flash sales are legit. Groupon and Foursquare were founded the same time about four years ago and U.S. adoption of social commerce far outpaces that of location check-ins. Couponing is a tried and true customer acquisition tactic, and can work into loyalty programs. Mobile access and targeting will only increase the effectiveness of such offerings, whether they come from Groupon or companies like Google and American Express.

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Does Groupon really want to take on Amazon, eBay, and Walmart? I suspect Ted Leonsis has more sense than that.

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