Specialist
Former C-level executive at Groupon Inc
Agenda
- Groupon's (NASDAQ: GRPN) operating environment – post-pandemic recovery for local business demand
- Competitive landscape as Groupon evolves towards third-party marketplace model
- Marketplace model overview – economics, main challenges and opportunities
- Outlook for 2021 and beyond – potential for M&A and key investment focus areas
Questions
1.
Can you outline Groupon’s operating environment, pulling out the trends or drivers that you expect to have the most impact over the next 12-24 months?
2.
Will getting the technology aspects in place – such as fulfilment – be Groupon’s biggest challenges when moving into an online marketplace pull model from the e-mail-based push model, or will it be building brand affinity with consumers to become the local destination for marketplace transactions? To what extent does Groupon’s success in the marketplace model depend on the company acquiring into the market more aggressively, considering the 15-20 competitors per country? Or is there still a window of opportunity to build out and get on par with some of the incumbent speciality competitors organically?
3.
Which categories do you think Groupon could specialise in? The company mentioned beauty and wellness in some of its recent earnings calls – does that category make the most sense? How long would it take to execute on the tech requirements in terms of how long they need to dedicate to the strategy and refrain from pivoting once again? It seems like it’s probably multi-quarter or multi-year.
4.
A lot of the post-pandemic trends that you identified sound like a tailwind within the local marketplace, in the sense that Groupon is offering deals to a more price-sensitive consumer. What are your expectations as we come out of the pandemic? How do you imagine the recovery curve? North America was tracking at around half of 2019 revenues exiting 2021, and international was even worse than that. Is returning to pre-pandemic levels a multi-year process? Do you think certain aspects of the revenue base may never return?
5.
You suggested that many local marketplace aspects have moved increasingly online, particularly relative to pre-coronavirus. Could you quantify how much has moved online over the last 12-18 months? Is that acceleration going to continue, given some offline shops and categories will notice how many merchants are moving online and it seems necessary to remain competitive in a local marketplace in the long term? To what extent has coronavirus caused a permanent acceleration of what is serviceable in the USD 1tn TAM that Groupon mentions?
6.
Who would you highlight as the highest-potential or most-likely external strategic partners for Groupon, noting that external investment would give the company access to capital? There was news flow around Groupon and Yelp merging pre-coronavirus.
7.
Would a partnership on a single-category basis be enough? We talked about OpenTable for food and restaurants, and discussed Treatwell for haircuts. Do you expect a single-category partnership, or would Groupon need to be a more diversified business to really make it work?
8.
I imagine there is a plethora of companies that could help Groupon across the three categories you outline, and Olo seems like the most public version of that fulfilment platform. Could you highlight any start-ups that have market-leading technology from a pure platform standpoint, without necessarily considering the merchant supply category?
9.
What would you monitor more closely – merchant inventory or user growth and purchase frequency? Which do you expect to be more difficult to maintain and accelerate? Considering the strategy we discussed where Groupon will reduce its hand-holding with merchants, could customer engagement decrease due to less deals? How might supply and demand play out over the next year or two?
10.
Do you think Groupon’s self-serve tool will be beneficial to new merchant prospecting, if it dedicates a significant portion of its existing sales team to retention and the existing supply? Is the self-serve tool bespoke enough to drive meaningful new supply?
11.
Would it make sense for Groupon to automate the supply management aspects and dedicate the sales team to new supply, given that new supply needs a high-touch relationship-based sales cycle? Would you expect the
existing merchant to react badly to being put onto something that is more self-serve and less customer care oriented?
12.
Is there a good rule of thumb for the typical sale productivity in the industry, perhaps on a per-month or per-year basis?
13.
Do you expect Groupon’s Market Rate vs Deals vs Offers to skew significantly one way vs the other, based on what the consumer resonates with the most? How repeatable do you expect merchants to be for certain deal types? Are there gross profit implications that we should consider if the Market Rate ends up being a significantly higher percent of listings that are executed on?
14.
What offers the most promising opportunity to re-educate the customer into being attracted to Market Rate deals? It might not be likely in the longer term, but is the repeatability of inventory listed by merchants as Offers in Groupon’s control? Is there anything that the company can do to drive the merchant to be more open to consistently listing the inventory at Offers vs Market Rate?
15.
To the extent that mobile traffic is the be-all and end-all for Groupon’s business vs desktop historically, are there any concerns around the efficacy of AI and machine learning automating processes in light of iOS changes to IDFA [Identifier for Advertisers] and potentially something similar with Android ID? Is that something Groupon is exposed to, or do most consumers log in and they can be tracked on the app?
16.
Do you think Groupon Select – the subscription product that was talked about pre-coronavirus – can mitigate consumer price-sensitivity? Could it be perceived as high value by loyal customers that only visit Groupon for deals? Alternatively, might we just stop talking about it over the next few years?
17.
Is there anything else that you wanted to add to wrap up our discussion?
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