(Bloomberg)—Groupon Inc. announced with its disappointing year-end results that it plans to stop selling goods—a retreat for a company that once aspired to be a major shopping service. Groupon is No. 55 in the 2019 Digital Commerce 360 Top 1000.
Groupon reported a revenue drop of 15.9% to $2.22 billion for the year ended Dec. 31 from $2.64 billion the prior year. Sales through its Goods platform declined 23.8% in 2019 to $1.09 billion from $1.43 billion the year before.
Groupon Goods, an ecommerce site for products like phone chargers and coats, was an attempt to attract new customers and decrease the company’s reliance on its core business—selling daily deals and other discounts. But the business’s contribution to profit has been declining for four quarters, and consumers have lost interest, Groupon said. That’s why it plans to phase out the program this year.
“Goods has outlived its role as a business driver and has become a significant drag on our business,” CEO Rich Williams said in a letter to shareholders.
The Goods division’s compound annual growth rate for the past five years turned negative this year, down 6.2% compared to a rise of 9.7% last year, and it has reported yearly declines since 2017. In 2019, gross profit from Goods sales fell by 25.9% to $174.2 million from $235.2 million the year before.
Groupon’s turnaround plan now hinges on relaunching the brand and kicking off a new marketing strategy, Williams said. The hope is to shift away from offering deals and be known as a marketplace where consumers can find local experiences.
The goal is “being top of mind when our customers are looking for the best things to do around them, when they need something to do with their kids on the weekend or for when they’re planning date night,” he said.
Groupon is No. 55 in the 2019 Digital Commerce 360 Top 1000.Favorite