Groupon Inc (NASDAQ:GRPN) is one of the “best positioned” companies in the local internet segment backed by a growing mobile presence and “closed-loop transaction approach”, according to a report from Deutsche Bank by analysts Ross Sandler and Lloyd Walmsley. Deutsche Bank has upgraded Groupon in the middle of the second quarter based on a series of factors like the fundamental change that the company is undergoing in its business, switching from push email to pull, and being one of the most dominant players in the mobile space.
Groupon offers a good opportunity to sellers
There are three significant growth drivers, as of now: better activation of current subs (200 m+) to customers through personalization, attracting new customers through mobile apps and PC websites, and coming up with more offers including new channels.
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Further, the analysts believe that Groupon Inc (NASDAQ:GRPN) is one of a few companies with maximum reach in mobile, with more than 40 percent of NA transactions from the channel surging to almost 100 percent year over year at present. The company has expanded to a user base of 43 million and these users are active buyers of services and products directly from merchants on the Groupon platform.
It offers a great opportunity for those sellers who are dealing with excess inventory and want to use Groupon platform, for promoting their inventory to attract the new customers. Around 500,000 merchants are contracted with Groupon to feature their deals on the site.
Groupon has transformed its strategy from push to pull. In the pull strategy, the company showcases deals on its website and mobile on a daily basis. Under this approach users can dig into the different deals in desktop and mobile apps, and Groupon Inc (NASDAQ:GRPN) is not forced to make tradeoffs based on limited shelf space as with the push email approach.
Analysts at Deutsche Bank feel that Groupon still has ample room to expand itself with massive potential to grow on customers, as well as on the seller’s side. Groupon operates in 48 countries, and the internet user base in these countries comes close to 2 billion, according to internetworldstats.com. If only 50 percent of these users are considered as potential online shoppers then Groupon’s 200 million email subscribers represent 20 percent of the potential market.
On the merchant’s side, around 500,000 merchants all over the globe have worked with Groupon and there are around 18 million SMBs globally to operate in the Groupon’s core category of Local Goods&Gateways, with another 40 million plus SMBs in non-core categories.
Marketing expense of the company has also come down in all markets over the past 10 quarters. Over the past four years, Groupon Inc (NASDAQ:GRPN) has reached 200 million subscribers and 43 million active customers. Analysts at Deutsche Bank hold that the company is in the midst of a turnaround and can surge further in coming quarters.