The State of Retailing Online 2015 report finds search and email leading the pack with e-retailers.
Daily deal site Groupon has reportedly rejected an offer from Google Inc.
Daily deal site Groupon has reportedly rejected an offer from Google Inc. that some reports valued as much as $6 billion. The deal would have been Google’s largest ever acquisition, surpassing the $3.1 billion it paid for online advertising firm DoubleClick.
Groupon, which says it has roughly 30 million global subscribers, including about 17 million in the U.S., says it will remain independent and may pursue an initial public offering in the future.
Groupon would have fit with Google’s other locally focused initiatives, such as Google’s recent enhancement of its Product Search comparison shopping engine that allows consumers to check whether a product is in stock at local stores, says Lou Kerner, vice president equity research at Wedbush Securities.
“Groupon’s strength today is not technology,” he says. “They essentially leverage e-mail and a strong sales force. Google comes at local with a tremendous technology focus, as well as a global reach that could have significantly leveraged Groupon’s early lead in the daily deal space.”
By remaining independent, Groupon is taking a significant risk, he says.
“Because someone is the early leader today does not mean that they will be the early leader tomorrow because the industry is so young,” says Kerner. “The top five players in five years might be completely different. There is tremendous competition by all the biggest online players. Google will be a major player, Facebook already is a significant player and now Amazon has placed a big bet on the space.”
While the daily deal space is currently focused around e-mail, Kerner says that the offers will increasingly shift to the social graph, such as Facebook’s News Feed and Twitter.
“E-mail is the biggest way people share information,” he says. “But social commerce is moving away from e-mail and toward the interconnectedness of social networks, which will make e-mail less important.”
Already Groupon competitor LivingSocial aims to leverage the social graph by encouraging consumers to share offers on Facebook and Twitter with the enticement that if they refer three friends to purchase an offer, the referring consumer receives the offer for free.
Amazon.com Inc.’s investment of $175 million in LivingSocial stands to help the Groupon challenger boost its market share, says Kerner. For the week ended Nov. 27, LivingSocial received about 8% of U.S. visits to 81 group buying sites, according to Experian Hitwise, a web measurement firm. That ranked LivingSocial second to Groupon, which accounted for 79% of those visits.
That’s because Amazon could leverage its size and integration with Facebook—the world’s largest online retailer allows consumers to log in to their Facebook profiles through Amazon.com in order to receive personalized recommendations for movies, music and books based on their Facebook profiles, as well as allows consumers to post personalized gift cards on their friends and family members’ Facebook Walls—to better position LivingSocial in the daily deal space, says Kerner.
“It’s the early days of the daily deals,” he says. “It’s the top half of the first inning and Groupon has an early significant lead that they can leverage. But there’s plenty more game left to be played.”