Groupon: Diversification Is The Strategy

Groupon Inc. (NASDAQ:GRPN), the leader in the daily deals market, has lately been following a conspicuous strategy to diversify its business. The daily deals revenues, which were 70% of total revenues for Q2 2013, have been declining, following a trend that firms in the daily deals business have not been able to avoid. In an effort to safeguard itself from the declines in the daily deals market, Groupon has re-invented itself by diversifying its business into other areas. The recent diversifications of the firm have been shifting from the flash deals business to the physical goods business, which accounted for 30% revenues in Q2 2013. The company is also focussing on strengthening its online travel business, Groupon Gateways, a fact which was recently supported by the acquisition of Blink. Blink is an app which provides customers with best deals for same day hotel bookings in Europe. The latest addition to the business of Groupon has been the acquisition of SideTour. SideTour is a marketplace which helps people discover, book, market and host local activities. The acquisition, in the words of GrouponLive General Manager Greg Rudin, furthers Groupon’s vision of becoming the go-to place for consumers to find just about anything, anywhere, anytime. The acquisition fits into the company’s vision and we believe it is a good move by the company to insulate itself from the volatile nature of the daily deals business.

The market has been positive on the company’s strategy to diversify. The stock has gained close to 33% since the appointment of Eric Lefkofsky as CEO, who has a clear focus to move away from the daily deals business and diversify the Groupon business. The stock price jumped 1.7% on news of the acquisition taking the total year-to-date gains to a whopping 141.6%.

To see Groupon’s latest stock price movement, click here Groupon (NASDAQ:GRPN)

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Virendra Singh Chauhan Virendra Singh Chauhan   on Amigobulls :

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