November 14, 2013, 11:24 AM

Groupon, hit hard by Gmail’s changes, lessens its reliance on e-mail.

The retailer’s e-mail open rates fell after Google changed its e-mail inbox.

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Google Inc.’s July changes to its Gmail service led to “double-digit” declines in the percentage of consumers opening up Groupon Inc.’s e-mails in the third quarter, the daily-deal operator said last week in a conference call with analysts.

Google on July 22 revamped its Gmail inbox organization to automatically filter different types of e-mails into tabs based on the sender, with one of the default tabs being “promotions.”

Groupon, which says it is one of the largest e-mailers in the world, says that change led to more shoppers leaving its e-mails unopened. That contributed to Groupon’s $2.6 million net loss for the quarter, it says. 

“Results were impacted by Q3 seasonality and double-digit declines in e-mail open rates related to the new Gmail promotions app that was rolled out earlier in the quarter,” said Eric Lefkofsky, Groupon CEO, during the conference call.

One way Groupon will deal the setback is by taking steps to rely less on e-mail to engage customers, the company says.

While Groupon’s business model was built on e-mail marketing, the daily-deal operator has spent much of this year seeking to lessen its reliance on that form of marketing. That push has largely worked; direct e-mail accounted for less than 40% of overall transactions in North America, virtually unchanged from the second quarter but down about 45% in the first quarter, Groupon says.

In the place of e-mail marketing, Groupon has pushed consumers to download its mobile app, which it recently redesigned. The mobile app follows customers as they travel, whether to another  city or to a different country. When the app detects that a mobile customer’s location has changed, it sends a push notification when she is in range of nearby Groupon deals, such as an offer for a restaurant down the block. Inside the app, local deals are automatically displayed based on the customer’s current location rather than her home town.

Groupon reported last week that in September more than half of its North American transactions were completed on mobile devices. More than 60 million people have downloaded Groupon mobile apps worldwide, the company says, with more than 9 million downloading them in the third quarter alone.

At the same time it launched its redesigned mobile app, Groupon also introduced a redesigned web site. The site offers enhanced search, which it features at the top of every page. It also employs drop-down, type-ahead search term suggestions. The search results now span all Groupon offers, including local deals, travel destinations, consumer products, restaurant reservations and live events. And for every search or browse click, the results are displayed along with a set of filters that simultaneously showcase Groupon’s selection of deals and enable customers to drill deeper into specific categories and collections based on their interests.

The company also said last week it is conducting a test that doesn’t require consumers to sign in to view deals on its site, which it hopes will further lessen its reliance on e-mail marketing. Such a change would mean Groupon would “no longer force people to become [e-mail] subscribers, which means anyone can just come to our site, browse a deal and buy it,” said Lefkofsky. If the change worked it could be a “watershed” moment for Groupon, he said.

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