Groupon Plans to Grow by Enhancing Its Marketplace for Small Businesses and Consumers Alike

Why it matters:

• Close to 60% of Americans surveyed by Groupon said they are more likely to support local businesses since the pandemic.
• Groupon has made its platform more self-service, both as a way to make it easier for small businesses to post offers and to cut costs.
• It is drawing more consumers with enhanced search capabilities and new options for repeat purchases.

Groupon, the online deals and discounts platform, is basing its turnaround plan on winning the $1 trillion-plus local economy.

It wants to become the top destination not only for consumers looking for experiences, services and products, but also for small businesses seeking new ways to market themselves.

Groupon sees growing demand for local goods and services – a total addressable market it estimates at more than $1 trillion – as the secret to its future success.

Over the past year, Groupon has made it easier for small businesses to use the platform and expanded the types of offers they can sell. It also has improved the customer experience with enhanced search capabilities and more targeted offers that reflect a customer’s interests and that encourage repeat purchases.

It is seeing those changes pay off, as pent-up demand is driving spending, and as the pandemic has shifted increased consumer support for small businesses.

“We think that now is that pivotal time when customers and merchants are ready to come back to the world. We want them to think of Groupon in a fundamentally new and expanded way,” Brian Fields, chief commercial officer at Groupon, told CO—.

Groupon surveyed consumers this spring and found the quarantines and social distancing of 2020 created prime conditions now to drive sales of Groupon deals for restaurants, spa and beauty treatments, activities and the other experiences it offers.

Of those surveyed, 74% said they never would take ordinary experiences such as eating at a restaurant or getting a haircut for granted again, a sentiment Groupon calls JODO – joy of doing the ordinary. Close to 60% said they were more likely to support small businesses than before the pandemic.

Evolving from an ad platform into a marketplace for small businesses

Groupon was born in 2008 as an advertising platform for local businesses. Businesses offer deals on Groupon, customers pay Groupon and Groupon pays the merchant after taking a percentage of the purchase price. Businesses in the early days would offer steep, one-time-only discounts as a way to connect with new customers, but in recent years Groupon has evolved into more of a broad-based marketplace.

Like many of the small businesses that use its platform, Groupon was hit hard in 2020 when the categories that drove much of its revenue — dining, leisure activities and live events, and beauty and wellness — were shut down. The company reported that its business fell by close to 80% at the beginning of its pandemic.

Even before the pandemic began, Groupon had been struggling with lackluster sales. It had brought new leadership onboard and announced a turnaround strategy. Interim CEO Aaron Cooper last year outlined his plan for “winning in local.”

Groupon has taken a two-pronged approach, investing in changes to make the platform better for both merchants and customers.

For merchants and small businesses, it has:

• Created campaigns to highlight individual small businesses.
• Improved the self-service features that let merchants get on the platform easily and change their offers as needed. Previously, merchants needed to interact with Groupon sales reps.
• Rolled out a new advertising product that lets merchants choose the percentage discount they want to offer.
• Improved the customer search interface to make repeat purchases easier, and to help local merchants be discovered.
• Offered data insights into what is trending in their local area.

For consumers, it has:

• Redesigned its home page and mobile app to make it easier for consumers to personalize their searches and discover relevant offers.
• Expanded the types of offers customers can see from merchants.

[Read here on free sales tools for businesses.]

Helping local merchants get discovered and grow sales via support teams and marketing muscle

Justine Hill, a makeup stylist in Las Vegas, and Tanisha Lawrence, owner of Brooklyn-based nail polish company Law Beauty Essentials, are two small business owners who have used Groupon to grow their sales.

During the pandemic, Groupon reached out to Lawrence as part of a campaign to support minority-owned businesses and featured her vegan, toxin-free nail polishes in emails and newsletters to Groupon customers and in its social media posts.

Lawrence, who has been a Groupon merchant for about three years, told CO— that Groupon assigned a support team to her, held a Zoom call, and talked to her about ideas for promoting her products. She said she saw a definite boost in sales every time Groupon featured her.

“A lot of companies are saying they want to support Black-owned businesses,” Lawrence said. “Groupon is not just saying they are going to help – they are actually helping,” she said.

Hill, whose company Moon Lit Beauty offers professional-level makeup applications for parties, weddings, photo shoots and TV appearances, said Groupon has helped her find new customers.

“Groupon has been an amazing way to tap into the local market,” she told CO—.

It has helped her get discovered by local residents who book multiple sessions, as well as visitors to Las Vegas who need a makeup stylist for a wedding or other event.

Hill has been using Groupon for about two years as a way to generate more clients to fill her schedule between her regular clients.

“I’ve met a lot of new clients and definitely have more traffic to my website since signing up with them,” she said.

She would like to see Groupon add more features to help merchants, such as incentives to encourage customers to leave reviews or giving service providers options to post images of their work.

The goal of Groupon’s “win local” strategy is to encourage more consumers to buy Groupon offers more frequently and drive repeat customers to merchants.

“You ask the merchants what they want and the top three things are going to be more customers, more customers, more customers,” said Jennifer Beugelmans, chief communications officer at Groupon.

“The more customers we get coming to our site looking for anything, the better off our local merchants will be,” Beugelmans said.

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