Groupon pulls out of e-commerce, refocuses on experiences

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Groupon is pulling out of the e-commerce business.
Image: Groupon

Those who haven’t used Groupon in the last few years probably remember the platform as one that helps you book cheap massage appointments, wine tastings, and restaurant packages. However, in recent times it has become more than that—and not necessarily in a good way.

Groupon went all-in on e-commerce, offering a vast selection of physical goods at low prices. Sadly, most of those were cheap, off-brand, and bizarre products. While they did provide a steady stream of income, they also did some damage to Groupon’s brand image.

On Tuesday, the company announced that it is pulling out of the e-commerce game and will refocus its efforts on its core business of selling local experiences.

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Struggling Competitor

Groupon’s move comes in the wake of disappointing 2019 performances. It announced its quarterly earnings on Tuesday, revealing that its revenue fell by 23 percent. A devastating mix of fewer customers, less traffic, and more competition is giving Groupon a major headache.

CEO Rich Williams said in a statement, “We believe our plan to exit goods will allow us to dedicate the focus and resources necessary to build a winning position as the purchase of experiences continues to migrate online.”

So, while customers won’t be able to shop for discounted Q-tip dispensers and off-brand athletic socks, they will still be able to book their favorite local experiences.

Groupon’s offerings simply couldn’t compete with the likes of Amazon and Walmart. Meanwhile, other companies like Wish who offer the same type of products are wholly dedicated to the business while Groupon spread itself too thin.

The company will stop selling e-commerce goods in the U.S. by the third quarter of this year. It plans to do so globally by the end of 2020.

Turning to What Matters

It’s clear that Groupon’s recent move isn’t a sign of desperation though. Rather, the company is simply moving on from an experiment that fizzled out and is pursuing a new path forward. That’s a lesson that many businesses must learn the hard way.

Williams says, “We’re taking immediate and decisive action to return the company to growth.”

Of course, the main part of that plan will focus on enhancing its local experiences marketplace. Groupon’s Q4 report says it will work towards building a series of offerings that include “merchants’ full catalogs” rather than just one or two options. Meanwhile, it also aims to deliver a better mobile experience for users hoping to buy vouchers on the go.

Once Groupon shuts down its e-commerce operations later this year, it will also launch a fresh new marketing strategy. The attempt should help restore some of the company’s image as the go-to place for local experiences.

Its CEO Williams says, “Our strategy is designed to remove limitations and distractions, and allow us to be laser-focused on the biggest opportunity for Groupon. Local experiences is where Groupon’s strength lies.”

While it might not be exciting news for shareholders, Groupon’s decision to abandon e-commerce is the right one. Moving forward, it will be able to do what it does best and help users engage with experiences in their community without breaking the bank.

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