Groupon Changes Business Plans as Search for CEO Begins

Groupon announced it has begun its search for a new CEO to replace Andrew Mason. Groupon’s stock has fallen more than 75 percent since its IPO, including a 20 percent drop after reporting its fourth-quarter earnings. The company may need to effectively transition from its past as a daily deals company to a future more focused on standing deals, discounted product sales and international business.

While Groupon used to thrive on its “Daily Deals” business in which it e-mail blasted customers with deals that would expire within 24 hours, the company now gets more than half of its local transactions from a “Deal Bank,” which operates as a collection of standing deals. The “Daily Deals” e-mails now drive less than half of Groupon’s traffic.

“It’s hard to believe just a short time ago we were a deal-a-day business,” said Mason.

“Expect Groupon to be less Groupon and more Fab,” suggests the Wall Street Journal. “Fab is a designer-level flash sales site, which sells products at steep discounts. Both companies are essentially doing the same thing, except Fab is selling hard products that it can ship, while Groupon ranges from products to experiences.”

This shift is evidenced by Groupon Goods, which sells items like discounted earring and laundry hampers, writes WSJ.

Groupon intends to reduce inefficiencies in its international market. “We did grow way too fast, with way too many people,” said Kal Raman, Groupon’s COO, in an earnings call. “We are making sure at every single market level that we have the right variable cost that would justify the leverage. We are going through the exercise as part of the one playbook and we will continue to do so. We are really happy with the progress.”

“To be sure, for all its missteps Groupon is still a sizeable business,” concludes WSJ. “It has a market cap of more than $3 billion. But it looks very little like the company Mason built from the ground up, with a massive sales force driving deals with a 24-hour time bomb.”