Finally the holiday season is here and Groupon Inc. (GRPN) is providing attractive deals to its subscribers. These include membership to Griffith Observatory and craft beer and pub food at Michigan based Frankenmuth Brewery.
Groupon and Friends of the Observatory are offering a one-year membership deal for $49.00. In Frankenmuth Brewery, customers buying the deal will get a 24-pack case of Twisted Helles “craft in a can,” along with pasta, pizza, burgers and traditional American food.
Apart from remaining open on the Thanksgiving Day and launching the Holiday Gift Shop, Groupon is also offering $100.0 million in Groupon Credits (also known as Groupon Bucks) to woo holiday customers.
Subscribers who sign up on Black Friday will receive up to $500.0 in credit and are required to spend the full amount on a single purchase. Groupon’s selective subscribers will receive $5000, which they have to spend by the end of the year.
In order to boost customer base, Groupon recently launched freebies that include digital coupons, promotion codes, sales, giveaways and samples, from more than 5,500 brands in the United States. The company plans to expand the offering to some key international markets in 2014.
The new category reflects Groupon’s strategy of diversifying its business besides the core daily deals segment. However, the coupons will take some time to contribute meaningfully towards the top-line growth. This is due to the fact that unlike daily-deals (revenue earned upfront), Groupon will earn revenues from coupons only if customers redeem them and purchase goods from the retailer.
Although the online discount coupon market is still in a nascent stage, we believe that Groupon has significant growth opportunity due to its growing subscriber base and mobile investments.
In the recently concluded third quarter, Groupon reported that 50.0% of the transactions in North America were through mobile devices. Moreover, more than 9.0 million people downloaded Groupon’s mobile apps during the quarter. Approximately 40.0% of global transactions were done through mobile devices in September.
Although mobile presents ample growth opportunity, increasing competition from more established players such as eBay (EBAY) remains a major concern. Moreover, a volatile macro economic environment and continued investments to expand its merchant base are expected to impact near-term results.
Currently, Groupon carries a Zacks Rank #3 (Hold).