Groupon have announced their earnings and the results were not as rosy as anticipated. But things could be worse. Groupon recently had a largely successful IPO and managed to raise about $700 million amidst a lot of criticism that the daily deals phenomenon was just a fad and not a viable business model.
Despite that, Groupon have been able to minimize their losses amidst austerity measures that may end up pulling the company out of the doldrums. In its earning call, CEO Andrew Mason said the company had sustained a $43 million loss to the period ending December 2011 although the company’s revenues had grown by 194% to $506 million over the same period.
With daily deals fizzling out, Groupon have had a hard time trying to reposition themselves for a more predictable and sustainable business model than the daily deals hype. In what may be seen as a move towards increasing value to their services, Groupon have turned to technology to solve their predicament.
This is in the form of strategic acquisitions of small tech startups with very high engineering pedigree. The most recent being the buying of Adku, a big data analytics company focusing on e-commerce and Mertado, a social buying startup.
Mason says the group buying site is reaching out to attract talent in order to key in more versatile technologies into its offerings and merge different value addition angles to their platform.
The company has also been able to dramatically reduce its marketing overheads which only last year stood at 100% operating expenses to a low of 30% this year. This is however nowhere close to those of e-commerce giants Amazon and eBay which are just at 5-10%.
Optimism is however high at the company as they work up to their new secret project, which the leadership declined to elaborate on and said the company would be launching soon.