Cue the Rocky Music: Groupon Fights Back with Reserve and Breadcrumb

The ever-changing fortunes of daily deal site Groupon are reminiscent of the dramatic verve found in your favorite Rocky movie (come on, everybody has one). On November of 2011, Groupon’s stock was over $26; a year later it had lost 90% of its value, closing on November 13^th, 2012 at $2.63. Now it’s back around the $9 mark - still way down, but by no means out. To extend the Rocky analogy, one could liken the Groupon of November of 2012 to the battered fighter bleeding out on the mat just before the legendary comeback music kicks in, whereas the Groupon of today sees the bedraggled Rocky back on his feet, doggedly pummeling his incredulous opponent as the crowd stares in disbelief. 

Down but Not Out

Groupon’s initial demise was brought on by a combination of factors, including heightened competition in the local couponing/daily deals space from Google, Facebook, Yelp, and Foursquare (among others), coupled with the rapid consumer adoption of mobile along with some significant management issues. In May of 2012, with the foundations of his erstwhile daily deals empire crumbling around him, Groupon CEO Andrew Mason tried to rally the troops by announcing his vision to re-shape the company into a one-stop marketing solution for local merchants, or as he put it, “the operating system for local commerce.” I must admit, I was among those pooh-poohing the idea at the time, pointing out that Mason’s grand new vision did not really mesh with the company’s existing reality. Convinced of the soundness of my analysis, I smugly went on to write Groupon’s obit before the company had issued its last gasp.

Looks like I was wrong.

Groupon has been working hard over the last year to fulfill Mason’s pledge to become a one-stop marketing solution for local merchants, focusing on the two areas the majority of small businesses care about: lowering operational costs and increasing sales. Enter Groupon Reserve and Groupon Breadcrumb.

Reserve

In September of 2012, Groupon purchased Savored.com, a New York reservations start-up that had partnered with over 1,000 upscale NY restaurants to offer users significant discounts on their final bill for making online reservations in advance.

Leveraging the Savored.com platform, the company launched Groupon Reserve at the beginning of July, initially focusing on 600 upscale restaurants in 10 major US markets. According to a July 1^st press release, though, the company has bigger plans for Reserve:

In the future, Reserve will also feature premium deals and experiences from top beauty, product, travel and entertainment brands, as well as similar reservations capabilities for spas, salons and hotels.

Groupon’s new CEO Eric Lefkofsky describes Reserve as “…an important step in our journey to become the leading marketplace for online deals, where consumers can come to Groupon and discover great businesses at unbeatable prices.”

According to Business Wire, Groupon plans on rolling out Reserve to the company’s existing iPhone app on July 30^th. The company also plans on rolling out Reserve to Android devices and the iPad in as well as launch Reserve in more cities in the United States and key international markets at some point in the (presumably) near future.

Breadcrumb

In May of 2013, Groupon relaunched Breadcrumb POS, its free iPad POS (point-of-sale) app for merchants. The product’s blog characterizes Breadcrumb as free, easy to use, and reliable – three things merchants are really looking for in a payments solution. Through its Breadcrumb Payments service, Groupon has set transaction fees as low as 1.8% plus 15 cents per-transaction, which is significantly lower than the 2.75%-per-swipe fee for Square (although Square gives merchants the option of paying a flat $275 monthly fee instead of giving the company a cut of every transaction).

In addition, Breadcrumb POS offers merchants a low price guarantee, pledging to “beat any comparable plan on credit card transaction fees.” This is smart, considering that transaction fees are a huge pain point for many merchants. To augment the user experience and insure reliability, the latest version of Breadcrumb POS also comes with customizable templates fit to specific business verticals, as well as offline payment functionality.

Groupon Redux

Businesses and consumers have two things in common: both are looking for convenience and cost-savings. To the extent Groupon can leverage new initiatives like Reserve and Breadcrumb to facilitate a win-win for businesses and end consumers alike, the company will find success once again. Once more, by building up customer loyalty on both the buyer and seller side of the transaction equation, Groupon opens up limitless possibilities for future expansion. 

Like Rocky, Groupon is down but not out. As the company endeavors to make an improbable comeback, let’s hope it follows the Italian Stallion’s example of confronting all challenges with the eye of the tiger.

--Image courtesy of VCAN.

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