Groupon may offer much more than a collection of coupons. The company is currently offering discounted products through a new initiative called Groupon Stores. Retailers can set up an online store on the Groupon site to sell their goods, which must be at least 5 percent cheaper than the normal prices. Groupon will take a 15 percent commission of the retailers’ sales. The company is testing the new marketplace model as a way to continue growing its Goods business.
Groupon isn’t piloting the program with huge brand names. Instead, the first Groupon Stores are smaller brands that sell everything from health products to jewelry to sports goggles. All of the items are required to be sold at a lower price on Groupon than at any other site, including Amazon and eBay. Retailers are responsible for shipping the order, unlike most of the other products sold via Goods.
Groupon is usually the one behind fulfilling the orders from the Goods section. Re/code called the practice “a costly operation that crunches profit margins.” However, Goods is still the fastest growing part of Groupon’s business. Last year, the company brought in $1.8 billion in Goods revenue. That’s up more than 55 percent from the year before.
This Stores initiative is part of the company’s strategy to become an online shopping destination. Groupon doesn’t need to become the next Amazon, but CEO Eric Lefkofsky does want to move away from email marketing and become a regular site that shoppers check for deals.
The company has a good start with the popular Groupon iPhone app, which is ranked sixth in the Apple App Store, and new tools that allow local businesses to set up their own Groupon deals without a Groupon representative.