Groupon Inc (NASDAQ:GRPN) appears to making progress in several areas, according to analysts at Deutsche Bank. They hosted meetings with the company’s management this week and say that the tone was “largely upbeat.” They came away “feeling better” about a number of things and issued an update to investors after the meetings.

Groupon

Groupon making a positive push toward mobile

Analysts Ross Sandler, Lloyd Walmsley, Deepak Mathivanan and Kevin LaBuz say one of the areas Groupon Inc (NASDAQ:GRPN) is making progress on is in its transition to mobile. They said the company’s move toward a pull rather than a push strategy is helping in this area. Groupon reports that about half of all North American transactions on a run-rate basis are mobile. On its second quarter earnings report, the company also said that email transactions are now less than 40 percent.

Groupon also reported that its mobile app download volume, which was 7.5 million in the second quarter, is in-line with that of Amazon.com, Inc. (NASDAQ:AMZN) and higher than the majority of other top ecommerce companies. According to Deutsche Bank analysts, mobile is turning into “a meaningful tailwind” because most of Groupon’s transactions are the result of its new pull strategy. Also mobile users are more engaged and have “higher purchase frequency of all Groupon cohorts.”

Groupon driving improvements in selection

The analysts also note that Dealbank perpetual deals are accelerating, up to 54,000 merchants, compared to just 45,000 merchants in the first quarter of the year. They note that the addition of new categories and selections improves user experience and pushes the frequency of repeat purchases higher. Groupon Inc (NASDAQ:GRPN) management believe that the company now only address a small percentage of Yellowpages local merchants and say that they are still only at 550 SKUs in Goods.

At the meeting with Deutsche Bank this week, the company also showed off its next generation sales force and merchant software tools to improve productivity and merchant satisfaction.

Groupon likely to meet goals

The analysts said Groupon Inc (NASDAQ:GRPN) again reiterated its goal this week for “high single digit” CSOI / Billings margin for 1-P Goods. That’s far above current levels, and they note that Groupon is investing “a ‘couple’ million dollars per warehouse” to move its volume away from 3PLs to in-house.

This should enable the company to lower its shipping and fulfillment costs and improve service levels and delivery times. The Deutsche Bank analysts note that Groupon’s Goods business is very different than Amazon.com, Inc. (NASDAQ:AMZN)’s business, so the company’s warehouse needs are different a s well. Groupon said currently it spends about twice as much per order in shipping and fulfillment than its peers do, so there is plenty of room to improve these margins.

In the long term, Groupon Inc (NASDAQ:GRPN) sees its Goods business more like Costco or QVC / HSN than Amazon. Deutsche Bank analysts remain Buy rated with a $17 per share price target on Groupon.