Groupon’s mobile volume grows, reaches 30pc
By Chantal Tode
May 8, 2012
The number of mobile transactions is growing
For daily deals giant Groupon, mobile is playing a bigger role all the time in how consumers access and purchase deals. For April, the company reported that nearly 30 percent of its North American transactions were completed on mobile devices, up from 25 percent in December 2011.
Groupon CEO Andrew Mason wrote about the company’s strong showing in mobile in a recent letter to shareholders. The executive also reported that the company sold more than 170 million Groupons to more than 33 million customers by the end of 2011.
“While Groupon Now!’s location based scheme is attractive to consumers in itself, the biggest reason consumers are using their mobile devices to purchase Groupons is that these consumers are using their mobile device for other tasks as well - both purchases and otherwise,” said Dave Kaminsky, emerging technologies analyst at Mercator Advisory Group, Maynard, MA.
“Consumers today use their phones to check email, search the internet, schedule their calendars, and, increasingly, to purchase goods and services,” he said. “As this trend increases, so will the number of mobile Groupon sales.”
The monetization challenge
As smartphone and tablet penetration continues to grow, many companies with an online presence are watching traffic increasingly migrate to mobile and are wondering how they can monetize these audiences. Such monetization efforts have proved challenging so far for more content-oriented online services such as Facebook and Pandora.
However, as the recent numbers from Groupon show, monetizing mobile may initially be easier for companies with an online commerce component as consumers embrace the idea of switching purchases they are already comfortable making in an online environment to the mobile space. EBay has also reported growing volumes for the number of purchases made via mobile devices.
Groupon is reportedly planning to roll out its SmartDeals on broad international basis by the end of this year. SmartDeals is Groupon’s personalization strategy that attempts to better match specific deals to specific subscribers.
While 30 percent of sales via mobile sounds like an impressive numbers, there are not a lot of numbers available in the mobile space so it is hard to know, for example, how Groupon’s mobile sales compare to those for LivingSocial, which is the only deals site that comes to close to Groupon in size and success.
However, IBM recently reported that mobile commerce sales were 13.3 percent of online sales during the first quarter and that mobile’s momentum during the holidays continued in the first quarter.
“As mobile becomes further integrated into commerce, the limit of deals sold via mobile will increase accordingly,” Mr. Kaminsky said.
“When NFC takes hold in three to five years, it is conceivable that nearly all deals purchased by NFC users would be sold via mobile,” he said. “This percentage will likely increase steadily as Americans begin to accept the mobile payments platform.”
Leveraging mobile’s benefits
The growth in mobile is important for Groupon as it tries to demonstrate to shareholders and others that its business model has longevity.
Lately, Groupon has had some financial problems and had to revise its fourth quarter results following questions related to its accounting practices. Groupon has repeatedly traded below what its stocks sold for in its initial public offering last year.
One of the biggest challenges Groupon faces going forward is continuing to build momentum in the mobile channel. The company will need to be able to provide consumers with innovative offers via mobile as others build their presence here and consumers get overwhelmed with the number of offers available.
Groupon could also potentially face competition from Facebook, which recently reentered the deals space after a short-lived attempt last year (see story).
The daily deals site continues to try to boost its mobile offerings and acquired Mertado.com earlier this year. The social shopping site could help Groupon enhance its daily deals offers with more content and greater context (see story).
“Groupon’s biggest competitor, LivingSocial, just switched their mobile focal point from location based deals - like Groupon Now! - to mobile ordering and payment of takeout and delivery from local restaurants,” Mr. Kaminsky said.
“There are a number other possible offers that effectively utilize the natural benefits of the mobile platform. It is up to Groupon to find them first,” he said.
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