A few selections from Groupon’s Q1 2015 earnings call*:
Our mission is to connect local commerce, in part by establishing Groupon as a daily habit. To do this, we’re focused on two areas:
The first is to create a marketplace filled with enough high-quality inventory that our customers can find just about anything they are looking for from their phones, and save money while they are at it. And the second is to dramatically improve the experience of using Groupon, when you’re out and about.
Let’s start with the first. We need to enable merchants to populate our marketplace with amazing inventory. This includes both more and better deals, as well as market rate inventory that we can leverage to create a thriving real-time local commerce marketplace.
Globally, we now have more than 425,000 active deals on the platform, including nearly 60,000 coupons. Excluding coupons, active deals grew to about 365,000, compared to 330,000 last quarter. Our goal is to more than double the number of active deals on our site over the next year, to ensure we are always in stock in our top categories, and top markets. To date, we’ve had a one-size-fits-all approach when it comes to merchants, and over time, we’ve come to realize it’s too limiting.
In order to double our inventory we need to attract merchants that don’t want to discount their products and services so heavily, but still want to access our large and growing community. That’s why we developed new multi-tiered approach to working with merchants, that starts with merchant pages. Pages are the entry point of our new inventory assembly line, as they create a transactional relationship between us and the universe of merchants we don’t do business with today.
To date, we’ve released about 900,000 merchant pages, to be indexed on Google. We will release more over time, and we will populate those pages with the market-rate bookable inventory, so people can make reservations and book appointments right on Groupon. We will then add specials or coupons for merchants seeking to promote their services on our platform. And finally, we’re trying to convert those specials or coupons into more attractive deals for our customers. We believe this approach will drive more merchants, more transactable units, and ultimately, more transactions on Groupon.
The second thing we need to do is to ensure that our customers have an amazing experience, every time they use Groupon. We need to improve the experience from search, to buy, to book, to redeem, to pay. Our customers should be able to navigate local merchants, find amazing deals, hit buy, book an appointment or reserve a table, walk in and redeem their Groupon, pay the bill, and handle any customer service issues they have seamlessly right from their phone, using the Groupon app.
As I’ve said, before the process of using Groupon needs to be easier than not using Groupon. This is equally true when it comes to our goods business. Although the primary experience today involves ordering a product and having it shipped, we are constantly exploring ways to localize our goods business.
For example, if one of our customers is on a business trip and it starts to rain and she decides to order a travel umbrella, we want her opening up our app, finding an amazing deal from our curated selection of umbrellas, and then making a decision, whether she wants an umbrella shipped to her hotel, or whether she wants to find a store near bike that has a similar umbrella for sale that she can pick up on the way to our meeting. We believe we can create truly amazing and contextually relevant experiences for our customers at the convergence of local and mobile.
Accordingly, we’ve begun to evolve the way we think about goods. Over the past few years, as we were building our goods marketplace, we took control over shipping and logistics, migrating most of our goods business to direct, to control the end-to-end customer experience. As the business has grown into a multi-billion dollar global marketplace we are now in a position to turn our focus to expanding supply, through a number of distribution channels.
As we remove our self-imposed constraints of moving inventory largely through our own fulfillment center, we intend to migrate more of our goods business to being fulfilled by a closely managed network of third parties that ship items directly to our customers. This will allow us to add far more items to our marketplace at a higher margin, and with the strong customer experience, much like our International marketplace, where a greater percentage of our business is third party.
Finally, over the past few years, we’ve invested significant time and money in connecting merchants to our marketplace. Through our merchant-facing operating system, called Groupon OS, we have built a suite of tools that connects merchants to our marketplace in real-time, a marketplace where about 105 million people have downloaded our app. This connectivity serves as the foundation for the platform we’re building.
*This excerpt contains forward looking statements. Groupon’s earnings materials, including a message on the use of forward looking statements, are available at www.groupon.com under the heading “Investor Relations.”