Five years into its existence, Groupon is grappling with the reality that it must evolve beyond simply fire-hosing leads at local merchants and begin helping merchants manage those leads and turn more of them into long-term, profitable customers.
In an onstage interview this morning at BIA/Kelsey’s Leading in Local conference, Sean Smyth, SVP Partnerships at Groupon, described Groupon’s ongoing evolution from a pure demand generator for SMBs to an operating system that works as much on the yield as the demand side.
Groupon reported about 19.9 million Groupon NA users in the third quarter, operating in 565 cities around the world. The company works with roughly 500,000 merchants. While a large number, 500,000 represents just a fraction of the roughly 30 million merchants worldwide in Groupon’s core verticals.
Smyth acknowledged that its early efforts weren’t always helpful to merchants, referencing widely publicized incidents where an excessive stream of deals strained some small businesses beyond the breaking point. The progression from “blunt instrument” demand generator to platform has forced Groupon to get into the weeds and really understand how its customers’ businesses work.
“We needed to learn what it means to run a good mani-pedi place,” Smyth said.
Groupon has been adding capabilities to build out this operating system concept. It acquired Breadcrumb, a tablet-based point of sale system for restaurants, a key Groupon category. It has also added a payments and reservations as core capabilities.
“We are looking at different chunks of how we optimize things for the merchant,” Smyth said. “We are still in the beginning phases of moving from the demand side to the yield side [for small businesses].”
On any given day, Groupon has 65,000 deals running in North America. Smyth’s job is to find partners to help Groupon expand demand to meet its robust supply of deals. “We have tens of thousands of partners now. We are looking for more help on the distribution side.”