The company will focus on selling experiences rather than products, after concluding it was “not well-positioned in a saturated retail market.”
In a statement accompanying its financial results for Q4 and full year to December 31, 2019, Groupon provided details of its plan to exit its Goods category, which includes toys, to focus on the local experiences market opportunity from the end of this year.
Groupon CEO Rich Williams commented: “We did not deliver the financial performance we expected during the fourth quarter and we recognize we must move swiftly to put Groupon back on a growth trajectory. Groupon is a leader and trusted brand in the highly fragmented, $1 trillion local experiences market. We believe our plan to exit Goods will allow us to dedicate the focus and resources necessary to build a winning position as the purchase of experiences continues to migrate online. Throughout 2020 you’ll see a stronger Groupon emerge, with broader inventory, modernized products, a refreshed brand, new ways for merchants to partner with us to grow and a leaner organization. Success in these areas will be key to achieving our goal of reigniting billings growth.”
In a letter to shareholders, Rich Williams offered further insight into the decision: “ After a comprehensive review of opportunities and strategic alternatives, we determined that a plan to exit the Goods category and focus on our local experiences marketplace best positions us for long-term and sustained growth. We believe this plan will allow us to devote the focused execution necessary to take share in the growing local experiences market. This market, which we estimate to be north of $1 trillion, is highly fragmented, growing, and migrating quickly from offline to online. Currently, we are a market leader, yet we have less than 1% market share. In addition, our 2019 Goods category performance, particularly in the fourth quarter, has made it increasingly clear that we are not well-positioned in a saturated retail market.”
It is not yet known how long existing Groupon buyers will remain in their current roles.