groupon vs amazonWith the pandemic fueled growth of Amazon, there’s a lot of chatter about the ‘next’ big ecommerce marketplace.  Sure Walmart and eBay have always been there, but there’s a new buzz about other players including Target, Krogers, and even small players like Wish.com.  How will their do?   It’s often useful to look at the past ‘contenders’ to see how they did.

Groupon may have started life as an online coupon site, but most of its growth and revenue is due to their discount goods business, which launched in 2011. Five years and nearly $2 billion USD in goods revenue later, the company was ready to take on the world of ecommerce mega giants like Amazon, eBay, Sears, Buy.com and Jet—just to name a few.

In 2016, Groupon started testing Groupon Stores, an ecommerce site that takes a page straight out of the Amazon playbook. In short: practically anyone can set up a Groupon storefront, as long as they agree to sell their goods at 5 percent below market rate—and give Groupon 15 percent of sales.

Groupon was distancing itself from the idea of toe-to-toe competition, in fact, the company’s FAQ page includes the question “How is it different than Amazon or eBay?” with the answer: “Unlike Amazon and eBay, the Groupon Stores marketplace is meant for a select number of your products that you’re looking to liquidate or promote through a discount.”

Another important way Groupon will differ is in who holds and ships inventory. Before this change, most Groupon goods were stored and shipped by Groupon. Groupon Stores orders were to be fulfilled by the merchant—very different from the FBA model, for now.

So what happened?  Not much.  Groupon is still dominated by services and local deals and was crushed during the pandemic with revenue dropping 36% ($800 million)   While they don’t break out marketplace / 3rd party sales, the trend was clear. If their marketplace had grown they would have seen the 30-100% leaps seen by Amazon, Walmart, and almost every other true ecommerce marketplace. They’re now revisiting the program and are focusing on specific categories.

Will it work? Should your brand be jumping into beta with Groupon Stores? Give us a call and we’ll be glad to go over your options with you