FinancialContent is the trusted provider of stock market information to the media industry.
January 20, 2012 at 11:53 AM EST
Groupon Goods Update and a Wolverine Bonus!
In late 2011, we introduced the idea that Groupon could effectively become/build a marketplace in this September piece and then this follow-on October piece where we tracked the value of the goods sold via the then fledgling "Groupon Goods" program....

In late 2011, we introduced the idea that Groupon could effectively become/build a marketplace in this September piece and then this follow-on October piece where we tracked the value of the goods sold via the then fledgling "Groupon Goods" program.

While I haven't written about the program in a while and Groupon had a small distraction, their IPO, the program has been quietly marching on and we've been tracking it over the ~15 week cycle since its inception.  From here on, I'll abbreviate the program as GG to save on some typing.

Changes to Groupon Goods Program

There have been a couple of material changes to the program to report on:

Promotion - First the program started as an email-only program - you had to get the GG emails and it appeared that they were sending it to about 10% of their US email base.  Today the program is now featured on the Groupon home page, header and within the daily local deal emails as you can see here:

Groupon_goods_promos

Ease of use - When the program first launched it was a bit cumbersome as a consumer because you had to follow these steps:

  1. Purchase the product-specific groupon
  2. Wait for the sale to end
  3. Get a unique one-off coupon code
  4. Go to the retailers site
  5. Find the product
  6. Add to cart / buy
  7. Enter the groupon coupon code
  8. Complete transaction

Many of the GG items still use this system, but in the batch we're talking about in this post which ran 1/11-1/18.  The majority of the items had a much simpler purchase flow:

  1. Buy the product at GG with your stored information
  2. Verify purchase, complete.

I suspect they will see a much larger completion rate and made this move as the drop off from the old system had to be pretty large (would guess 20%-ish).

Deal dynamics - The final big change is the deal dynamics.  When they initially launched there were 6 deals and the ASP was $57 with a range of $40-$440.  They sold as many as 28,000 of one unit.  In the latest completed sale:

  • Number of deals: 20
  • ASP: $32
  • Range: $10-$295
  • Deepest quantity: 5,000

So they are trending towards more deals with more shallow inventory.  Also, the ASP has come down by about half - from $57 to $32.

It's a little publicized fact, but a big chunk of Groupons team come from Amazon.  Consequently, watching the program mature over the last 15 cycles, my conclusion is they are making some smart changes based on data, consumer behavior and trends they see in the program all in a very Amazonian fashion.

Finally, the rapid explosion of deals shows that there is no shortage of supply for this offering and further supports our thesis that Groupon could possibly take this program much deeper and further.  For example, it looks like they are actually emailing fewer people the GG emails as they tweak the program, yet sales continue to be very strong.  How strong.....?

Tracking the latest Groupon Goods Sale

Funny you ask - we've been tracking the GG's since inception and in this post report on the sale that ran from 1/11/12-1/18/12 (they run Wed->Wed) to get a pulse of the program.

In the 1/11 deal set, there were twenty deals and they generated over $2m in GMV.  This table details each deal and the totals.

Groupon_goods_1_11_12

On a per-week basis, GG is pushing $2.1m in sales across 67k items.  That gives it an annualized run rate of $200m, making it one of the top 4 marketplaces in the US and ten globally:

Top US marketplaces (by GMV)

  1. eBay - $25b (us, ex-autos)
  2. Amazon - $10-12b (estimate)
  3. Buy.com - $250m (estimate)
  4. GG - $200m
  5. Sears, Walmart, BestBuy, NewEgg  (all very nascent still)

If GG is only leveraging ~10% of it's audience, we still believe they could scale this program up to 

Conclusions and a Bonus - Awesome Groupon video to watch...

What do you think about the GG program - fad or future top marketplace?  In conclusion, if you haven't seen Andrew Mason's interview on 60-minutes from this weekend, it's time well-spent.  My favorite part is when he likens Groupon to Wolverine and Stahl looks at him like he's from Mars - and voices over: "I'm not sure what that means".

Here's an embed of the original piece:

Here's a bonus video worth watching too: (watch for the rent-a-monkey piece):

SeekingAlpha Disclosure - I am long Google and Amazon. eBay is an investor in ChannelAdvisor where I am CEO.  I occasionally buy Groupons, mostly for manicures and teeth whitening ;-)

Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here
   
Financial Widgets

Display market data, financial news or stock quotes - Learn More

Advertising Network

Advertise on FinancialContent's huge network - Learn More

Web Services

Power your internet and wireless applications - Learn More