January 31, 2014, 2:19 PM

Is Groupon planning a private-label line?

A LinkedIn job posting suggests the daily-deal operator is developing a private-label line for its division that sells physical goods. The move to selling goods under its own label is a natural next step for Groupon, says an analyst.

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Groupon Inc. appears ready to begin selling private-label physical goods via its Groupon Goods division, suggests a recent job posting on the LinkedIn social network.

The posting for a Groupon Goods “global manager, private label” says that the daily-deal operator is looking to hire someone to serve as a project manager to oversee the contracts, marketing and legal issues involved in producing and selling private-label items.

A Groupon spokesman declined to comment, saying that Groupon has nothing new to announce.

Groupon Goods has been a bright spot for Groupon since its 2011 introduction. The division generated $454.7 million in revenue in 2012, up 2086% over 2011, making Groupon the fastest-growing retailer in the Internet Retailer 2013 Top 500 Guide. The company, best known for the daily offers of discount vouchers, in November opened its first fulfillment center to speed delivery of physical goods. It also moved deeper into the sale of physical goods with its acquisition of ideeli Inc. , a flash-sale retailer, earlier this month.

The move to selling goods under its own label is a natural next step for Groupon, says Sucharita Mulpuru, Forrester Research Inc. vice president and principal analyst. “Private labeling has higher margins than any branded good they sell, I’m sure,” she says. “It's a typical strategy for any flash-sale or daily-deal site—you need to ultimately create your own products to scale.”

While Groupon Goods continues to grow quickly—the division reported revenue in the third quarter of 2013 reached $200.1 million, a 38% jump from a year earlier—critics point out that selling physical goods has significantly lower margins than its traditional voucher business. Moreover, even though the division is producing significant revenue, some suggest that the Groupon brand might be too associated with discounting to make its own branded goods appealing.

“I understand why they’re doing it, but I’m not sure Groupon has a strong enough brand on its own to support its own private label,” says Paula Rosenblum, managing partner at research and advisory firm RSR Research LLC. “I imagine they’d have to sell product at very low prices for a while, until word got out that the quality is good enough.”

 

 

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