Skift Take

Critics have long charged that Groupon is not a sustainable business. That's because Groupon tends to turn off merchants because Groupon's cut of sales is so huge. Groupon's decision to take a diminished slice amount to a recognition that the critics were right to a certain extent.

Although Groupon disappointed the financial community with its fourth quarter results and forecasts, don’t blame the angst on travel.

Groupon likes to cite a non-GAAP metric, “gross billings,” and CEO Andrew Mason said February 27 that its travel and goods products both saw strong sequential increases increases in gross billings during the fourth quarter in North America and internationally.

And, without providing specifics, COO Kal Raman predicted that its Getaways vacations’ business will become “a meaningful percentage of our business in the long run.”

Expedia partners with Groupon on Getaways in the U.S., and Groupon handles Getaways on its own abroad.

“And we are very happy with the progress we are making,” Raman said, referring to Getaways. “It is too early to declare victory, too early to report numbers on that as we talk. Raman said:

Yes. Getaways is a fantastic segment for Groupon, and the business is fairly new. It’s been around for a little over a year. And our customers have been trained extremely well to look for curated deals with unbeatable value and we shock them into buying things they never thought when they wake up in the morning. And travel is actually the best way to shock people into taking a vacation, buying the deals they want to buy.


Meanwhile, Groupon made a major concession in its “local” business, which includes everything from yoga classes to river tours with lunch, for example.

During the fourth quarter, Groupon decided to reduce its margins to give local merchants a higher cut. That drove demand in the U.S., the company said.

Groupon has long been criticized by for taking a too huge slice of merchants’ sales, splitting the  revenue 50-50.

For the fourth quarter, Groupon posted a net loss of $81 million, compared with a $65.4 million loss a year earlier.

The company’s revenue increased 29.7% to $638.3 million during the fourth quarter.


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Tags: deals, expedia, groupon

Photo credit: Groupon believes its travel business will help take it places. Groupon

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