2016 Letter to Stockholders

In 2016, Groupon made some of its most significant strides as a public company as we continued to make progress on our path to becoming the daily habit in local commerce.

Local continues to be a vast opportunity. Connecting customers with millions of small businesses around the world — and helping build vibrant and growing communities in the process — continues to be our focus. Few others have the scale or ability to tackle this challenge, and no one has made as much progress in such a short time.

Since inception, Groupon has generated more than $13 billion with well over one million local businesses, and more than 50 million customers continue to trust Groupon to deliver incredible value on the things they do everyday and that make their neighborhoods great.

This is a mission that our more than 7,000 employees around the world take to heart and where we continue to do amazing work.

2016 was also a year of significant transition for Groupon.

Having built one of the largest marketplaces in ecommerce over the past eight years, our overall progress is clear. And, as exciting as that progress has been, I believe we still haven’t realized our full potential. We’ve often simply tried to tackle too many things in this vast space. It’s understandable: when you are pursuing an opportunity like local in real time with no tested blueprint, the potential for distraction is real and significant. Moving into 2016, it was clear that our business needed more focus.

When I took the role of CEO, I set out to bring focus to the business and team; to channel our collective energy and unleash it on four foundational things: streamline and simplify our business, grow customers, reduce empty calories and improve the overall customer experience. We believe these are the core elements to building a thriving business for the long term, and the team produced great results.

In short, we did exactly what we said we’d do. And we exited the year with double-digit North America local billings and — more importantly — gross profit growth.

Streamline and Simplify
Streamline and Simplify

Most significantly, we fundamentally changed how and where we do business. Over time, Groupon had sprawled and the business became increasingly complex. At the beginning of 2015, we operated in 47 countries. This effectively meant running more than 40 companies — companies with their own sales, customer service, finance, operations and editorial teams. Bottom line, we were fighting too many tough battles that weren’t critical to our long-term success.

Over the last 14 months, we challenged our teams to simplify our business and to ensure we were only working in markets where we were poised to win and where we believe there would be strong return on our long term investments. That meant big changes to our operations, as well as our geographic footprint.

After a year of tough decisions and significant restructuring work, our global footprint sits at 15 countries. These are the markets where we believe we can continue to grow great businesses and that will benefit most from our products, scale and expertise.

As we trimmed our global footprint, we also expanded regional and global shared service centers to more efficiently provide core operations and service support for consumers and merchants around the world. These shared service centers are another key way we’re further streamlining our operations and making the business simpler to run while delivering a more consistent experience for customers. It’s also a much more efficient operating model, which is visible in the strong trend of cost improvements we’ve delivered since undertaking these efforts.

We will continue to focus on this area going forward. Running a lean and tight business is now part of our DNA.

Grow Customers
Grow Customers

We also made outstanding progress in growing customers. Groupon has built an incredible brand — one consumers recognize and embrace. It is a tremendous asset. We are also operating in a massive and underserved market where customer scale is critical and where we already have a strong foundation. In 2016, we invested more than $360 million in marketing to truly capitalize on our brand and extend our customer advantage. Over the course of the year, we added more than five million new customers in North America — our most since 2012. In addition, we acquired LivingSocial — one of our original competitors in local — to give us a further way to connect with customers through another strong brand.

As an extension of these efforts, we also launched our first significant offline advertising campaign since 2011 to reacquaint customers with Groupon while demonstrating how the company has evolved from our daily deal roots. Combined with our traditionally strong computational marketing efforts, we were able to effectively and efficiently drive millions of profitable new customers to our marketplace and further bolster our brand.

Expect more great things on this front as we move forward.

Reduce Empty Calories
Reduce Empty Calories

Another key focus for 2016 was reducing empty calories — particularly in our Goods business. As we’ve increasingly focused on gross profit as the best indicator of the overall health of our marketplace, we needed to pay particular attention to our margins. While this is something we track for all our businesses, it is especially important in Goods. Over the past 5 years, our Goods business has been a powerful tool for customer engagement, activation and retention. However, Goods was also too reliant on low margin products that are good for revenue, but contribute little to the bottom line. We are focused on sustained gross profit growth and long-term customer value, and we believe we’re building our businesses to reflect that.

In 2016, we made solid progress ensuring that our Goods operation is a healthy part of Groupon. With improved margins, Goods helped us deliver 10% more incremental gross profit in North America year over year. Further, even as we’ve removed those empty calories, Goods continues to be a tremendous source of Local customer activation, with roughly 40% of Goods buyers also purchasing a Local deal.

As we enter 2017, we believe Goods is healthier, and we’re using it more strategically to fuel long-term marketplace growth.

Improve the Customer Experience
Improve the Customer Experience

Even with a strong brand, amazing local merchants and tens of millions of loyal buyers, the customer experience remains king. Your product has to deliver value, but it also needs to be easy and rewarding to use. Then you have to back it with excellent service and support.

During the course of the year we made real improvements in our customer service levels driving them to industry standards with plans for further gains. We continued to deliver category-leading customer satisfaction ratings and boast a Net Promoter Score of 72 that rates alongside the world’s best brands. This is an excellent foundation from which to build.

We also invested significantly in our mobile experience. Groupon is the top rated retail app in the United States according to Applause and the second most visited retail app in the country — behind only Amazon — according to Comscore. Our app has more than 145 million mobile downloads and more than 60 percent of our transactions occur on a mobile device. We are — and have been — a mobile-first company. It’s now clear that we’re also a leading mobile shopping destination.

At the end of the year we launched a dramatically improved app experience to build on our already-strong mobile history and deliver more of what consumers want. It is as much as 40 percent faster with vastly improved mapping and geolocation, filters, and browse features that make it even easier to find the perfect deal, wherever you are.

We also began attacking one of the biggest friction points at Groupon: voucher expiration. This has been a thorn in customers’ sides since Groupon’s inception. When vouchers expire, no one wins. Customers feel like they’ve lost out on a great deal. Merchants miss out on a new customer. Our new trade-in program allows customers to extend the expiration date of their deals or trade in a recently expired deal for a new one. We believe this is another key investment in a healthy marketplace.

These were all important improvements in the customer experience, but the reality is that our work here is never done. I expect even more gains here in 2017.

The year ahead
The year ahead

Our progress in 2016 is due to our focus. We set out four key priorities and spent the year relentlessly driving toward them. But there is still work to do. Winning in local isn’t a one year proposition. There’s a reason it is one of the last spaces to be disrupted. It takes time, resources and a great team with a true passion for helping consumers get the most out of their daily lives and for helping small businesses thrive.

Moving forward, we will use what worked for us in 2016 as a foundation for continued progress and refinement. In 2017, we will continue to focus on making the business simpler to run, on making Groupon easier for customers to use and merchants to work with, on continuing to increase our customer base and how frequently they engage with us.

We will make ease and elegance a key priority in our products as we build toward a truly voucherless future. That’s right: Groupon with no physical coupons. At the same time, we plan to make our platform even more powerful for merchants with flexible discounts and even market rate inventory alongside our traditional deals. The combination should mean a seamless and frictionless experience where nearly 50 million customers always find what they’re looking for.

Long term success
Long term success

I’m often asked what long-term success looks like for Groupon. Ultimately, I see success as a world full of amazing neighborhoods built on amazing merchants — vibrant places where people eat, shop and — most importantly — connect. How do we do that? First, we have to ensure Groupon remains a great place to work with amazing people helping us tackle this incredible opportunity. We then need to remain focused on delivering against our strategy, which is helping us move step-by-step to being a daily habit for customers and an indispensable asset for businesses.

When we do all that, we’ll also have built a great company. I feel incredibly fortunate to be able to share this incredible journey with all of you, our valued stockholders, customers and employees.

We are as excited to play a part in that as we were eight years ago and excited to be even further along the path.


This letter contains forward looking statements. Groupon’s 2016 Annual Report includes a message on the use of forward looking statements and is available at http://investor.groupon.com/annuals-proxies.cfm.


Diversity at Groupon


Diversity continues to be a hot topic in the tech community.

And for good reason: most tech companies want more diverse employee populations.
Groupon is no different.

We’re pushing hard to increase employee diversity at Groupon and have made solid advances over the past year.

Today, I want to update both our diversity statistics, as well as the programs we have in place to continue the momentum we’ve seen since our last report.

First, though, let’s take a step back and talk about why we think increasing diversity in the workforce is important. Some talk about diversity as if its value is self-evident. But that sells the topic short.

There’s value to the larger conversation when companies talk about diversity in terms of leverage — e.g., how and why diverse communities can be a force multiplier for their businesses. And there’s value to the larger conversation when we’re more expansive with the definition of diversity: race and gender diversity are important pillars, but so too are veteran status, sexual orientation, age, disability, religion, nationality and parental status, among others.

Here are just a few of the reasons we’re focused on diversity:

Groupon’s merchants and customers are a melting pot of countries, cultures, backgrounds and upbringings. Having a diverse workforce helps us better relate to and serve those perspectives. It allows us to step beyond just being a customer-focused company; a diverse workforce gives us the opportunity to truly connect with our customers and the communities in which they live.

How that plays inside the company day-to-day is that diversity brings viewpoints and ideas to the front that may not have otherwise been considered and that can accelerate innovation. A more diverse workforce can bring a different kind of idea to the table, and that can net more good ideas and more great things for our customers.

Even with work to do, we see the benefits of diversity in product design, in user experience and in our sales calls at Groupon. This matters for our culture and our business. It’s not some box ticking initiative… we’ve learned from other areas of our business that bolting on foundational elements doesn’t work. We’re making progress because we’re continually integrating diversity into all parts of our organization — from hiring, to training, to retention, to career development, to reporting.

All that said, here are Groupon’s updated diversity statistics. We know there is room to grow, but we are making progress thanks to the commitment and the work we’ve done to make this a core part of our business.

Let’s dig in:

Global Diversity | March 2016

Global Gender

Male 53.38%

Female 46.62%

Leadership

Male 84.25%

Female 15.75%

Tech

Male 83.9%

Female 16.1%

Non-Tech

Male 48.97%

Female 51.03%

US Diversity | March 2016

US Ethnicity

Leadership

Tech

Non-Tech

Overall Diversity

Women in Leadership
Global Numbers

Net + 54%

Women in Leadership
Global Percentage

Net + 19.2%

Women in Technology
Global Percentage

Net + 13%

Overall Ethnic Diversity | US

Net + 57%

Black and Hispanic/Latino Diversity | US

Net + 62%

What we’ve done isn’t as important as what we’re doing. To that end, here are a few of our key focus areas:

  • Continue to expand our sourcing efforts with diverse communities

    We are focused on establishing stronger relationships with diversity networks, organizations and schools. Many talk about a “diversity pipeline” issue, but we think that’s only a challenge if you artificially constrain where you look.

  • Enhance leader capability

    While diversity works best as a core value that’s spread throughout an organization, there’s no denying that leaders play a key role in the success of diversity initiatives. Equipping leaders to champion diversity efforts begins with helping them understand potential institutional and personal barriers. To that end, we’re working with Paradigm on training for managers across all our functions to raise our cultural awareness and remove potential barriers to inclusion.

  • Continue to support STEM education and women in Tech

    We’ve established strong partnerships with great organizations like Girls Who Code, Grace Hopper and Chi Ladies Hack. In some cases, these have a longer-term focus on developing future generations of diverse talent, but — in all cases — they’re deserving groups we’re excited to work with.

  • Maximize the role of our Employee Resource Groups

    Our ERGs — Women@Groupon, Blacks In Groupon, Parents@Groupon, Pride@Groupon, and Veterans For Groupon — are passionate cultural ambassadors both inside and outside of Groupon. We want to help these groups be even more effective in recruiting and retaining talent, as well as in telling the Groupon story.

  • Remain thoughtful about how we select, develop and retain talent

    This one is pretty simple. We’re enhancing our Human Resources tools and practices to ensure that we nurture talent across the company and that we provide meaningful careers for everyone — including our diverse populations.

We haven’t cracked the code on growing diversity at Groupon, but we’re working on it, and — most importantly — we’re making progress. Hopefully, our path is one that others find useful.–RW–

Dear Stockholders

In 2015, Groupon continued on its mission to become the daily habit in local commerce — making some of our most significant progress on this front in our seven-year history.

We introduced 1.5 million new customers to our marketplace, we added more than 300,000 active deals to our platform, and we continued to make strides in local and mobile commerce with more than 100 million transactions occurring on a mobile device.

Customer Growth

We also hit the reset button in some key areas. We made a series of fundamental changes to the business, reprioritized aggressively, and implemented a new strategy that we believe sets a stronger stage for long-term success.

Even as we endured some short-term bumps in the road, we moved quickly and decisively because we believe the opportunity in local is simply too vast, our overall operational advantage too strong and our team too talented to let competitors or markets dictate our path. While we have not always done a good job of telling our story, I am energized by our progress and leadership position and look forward to spending my first full year as CEO building on our momentum.

Taking a Step Back

Before going further, I’d like to take a step back. What do we mean when we talk about the “opportunity in local”?

Local commerce is a multi-trillion-dollar global economic engine, and it’s proven to be among the last spaces to benefit from the internet and mass mobile adoption. There are tens of millions of diverse small businesses around the world, and for the most part they have yet to be fully connected to and enabled by technology. And they’re all looking for customers.

The vast majority of these merchants aren’t marketers by trade. They’re largely living out their dreams of making great pizzas, giving amazing massages or helping people discover the world around them. Even when they have the expertise, many lack the time and resources to effectively market their businesses.

Groupon was built around connecting small businesses with consumers at scale. Combining our loyal and active customers with our local marketplace has proven to be one of the most effective small business marketing channels ever — one that comes at no up-front cost to merchants, and yet has resulted in billions and billions of dollars flowing into small businesses and neighborhoods around the world.

No one has proven to be more effective at coupling relevant local offers with high transactional intent. And we’re only getting better, having evolved from a daily email company to a largely mobile marketplace with tremendous scale and a number of levers business owners can use to grow and succeed.

Given that we are just seven years old, and given the millions of merchants and hundreds of millions of consumers with whom we’ve yet to work, we see the opportunity as vast, our team talented and our competitive position strong.

Building the Daily Habit in Local

So what then does it mean to build the daily habit in this vast local commerce space? Our roots as the daily deal email company are fundamental — it helped make the Groupon brand a household name and synonymous with saving money. Few brands ever achieve that kind of position or equity, let alone in seven years. The downside is that as we’ve expanded our value proposition and evolved beyond the daily deal email business, we didn’t bring customers along with us as quickly as we could have.

Being the daily habit in local means that customers don’t just wait for their morning Groupon email — something that tens of millions of our customers do every day — it means that they think of Groupon when they’re hungry, when the kids are bored and need to get out of the house, or when they need a manicure or haircut. That habit will be reinforced by our customers knowing that they’ll find amazing value on Groupon, whether that value comes in the form of a great discount or via being able to make an appointment and tip and pay at a small business without touching a wallet.

Achieving our mission means that Groupon is a transactional and marketing engine for local commerce. It means bridging a vast white space that many internet and mobile technologies have yet to reach. It also means so much more to the communities in which we operate.

While building the daily habit could very well mean that Groupon becomes an even bigger business and creates a lot of shareholder value over time, it should also mean that we’re making a significant positive impact on neighborhoods around the world. We believe that winning in local means that small businesses are winning, which matters on a level much deeper than dollars and cents.

Money into Local

Small businesses are the economic backbones of the neighborhoods we live in. They are also job creators, meeting places, cultural hubs and, occasionally, local legends. They are at the core of what makes “your” neighborhood special and often times what keeps your neighbors employed. We shouldn’t — we can’t — lose that. Groupon is committed to giving small businesses the tools to do more than compete — we’re here to help them grow and win. When that happens, we all win.

Focusing the Business, Driving results

When I took the CEO post last November, I focused the business on a few key initiatives. I said that we would streamline how and where we do business, that we would dramatically increase our customer acquisition efforts and that we would move away from empty calories — those low-margin product categories that drive short-term revenue but fewer long-term benefits — particularly in our shopping business. For 2016, we added making dramatic improvements to the customer experience to our priorities.

Our most significant changes in 2015 involved how and where we operate. We became a leaner, more efficient and productive company as we took a hard look at where it made the most sense for us to do business.

One Billion Groupons

At the beginning of 2015, we operated in 47 countries. By the end of 2015, we operated in 28. We took a broad approach to this initiative. In some cases we found partners to help fund future investment in markets we think have great promise. In some cases we streamlined the business to focus on local businesses, rather than products. In some cases, we exited a market entirely, simply because winning there did not deliver long-term returns or justify the short term investment. In all cases, we focused and rationalized the business, creating regional shared service centers for our deal factory and customer service groups in order to generate operational leverage and a more consistent customer experience.

When complete, we will have a geographical footprint and operating model that we believe is significantly more sustainable.

We also made a strong bet on the future of Groupon — our customers. Simply put, we had not grown our new customer base at a rate commensurate with the potential of our marketplace. In the second half of 2015, we began to significantly expand our customer acquisition efforts to better match supply and demand on our platform. We decided to invest an additional $150 to $200 million in marketing to better match customer demand with the growing supply of deals on our platform. This work will continue throughout 2016, but the early results confirm that people everywhere are looking for great value, and looking to Groupon to deliver it in a local, relevant way better than anyone.

Next came our Shopping business. It is a growing part of the Groupon experience and something our customers consistently tell us is interesting, fun and a trusted source of value. However, we had also become too reliant on what I call “empty calories” — those product categories that generate short term revenue gains, but less in the way of long-term customer loyalty or support. We decided to move away from these items and focus on the categories that generate healthy margins and bring customers back to the site again and again. We made strong progress here, even through the price-competitive holiday season. 2016 is off to a good start as well.

Making the Customer Experience Great

We spent 2015 focused on the fundamentals — three key areas where we could quickly make bold moves to drive the business over the long term. In 2016, we intend to make dramatic improvements to the customer experience. As we add tens of thousands of merchants to our platform, as we drive millions more customers to our marketplace and as we make our shopping category a true advantage for us, it is imperative that we make the total Groupon experience unmatched.

While we have made improvements, today’s core Groupon experience isn’t all that different than it was a few years back. Consumers and merchants still experience too much friction when redeeming a Groupon. Expirations still vex customers and pose a barrier to new purchases. Our customer service levels must catch up to the expectations our customers have for our brand.

Our advantage here is that we have cemented our position as a leader in mobile commerce and a trusted mobile utility for our customers. Groupon was one of the first large-scale ecommerce companies to be predominantly mobile, and now nearly 60 percent of our global transactions occur where we are a clear leader: on mobile devices, all around the world.

Old VS New

Our opportunity is to bring a better mobile product that more closely matches the current and future use cases in local — with a low friction buying and redemption experience supported by amazing customer service. We began this work in 2015, but we expect the payout will be seen in 2016 and beyond. Delighting customers isn’t a one-year proposition. It’s an every-year requirement and one we plan to fulfill.

The Road Ahead

Shortly after taking the CEO post, I acknowledged that the path for pioneers is rarely easy. It is difficult — but also hugely rewarding — to be first. That remains true for Groupon. There is much work left to do, but we have already made tremendous strides in just seven years toward becoming an indispensable asset for consumers seeking value and for small businesses seeking exposure. We believe no other company is poised to better connect these two groups, and the potential in doing so makes any challenges well worth it.

Fortunately, the Groupon team is purpose-built to meet these challenges. I am incredibly fortunate to work with a group of talented and dedicated people who truly care not just about building a great company but also about the consumers, businesses and communities we serve.

The first company to truly bring local commerce into the online world — to be the app for Main Street — will be a very special thing. Groupon continues to march closer to this goal. In 2015, we learned some hard lessons and made some hard decisions, but we also made real progress. It is still amazing to me to think that in just seven years we’ve sold more than a billion Groupons and are a part of everyday local life for tens of millions of customers and hundreds of thousands of merchants. In 2016, our goal is to accelerate our progress and add even more value to our customers’ lives, which is central to generating long-term shareholder value.

I continue to believe that focusing on our four strategic priorities — which ultimately are improving the fundamentals and delivering a great customer experience — are the key to faster progress. So far that focus has delivered a Groupon that is stronger, leaner and faster today than it has been in a very long time. We are steadily improving and our marketplace is developing faster than ever. We have the people, a strategy we believe in and more hard fought experience in local than just about anyone. We also have a mission with impact potential that far exceeds our customer, merchant and shareholder reach — a fitting reward for a pioneer in a space this vast.

We never expected that winning in local would be easy — there simply are no silver bullets in this space. But we do expect to continue to build on our momentum with ever-improving execution. It’s a challenge we gladly take on every day. Thank you for joining us on this journey.


Groupon’s Record-Breaking Black Friday

With another Black Friday weekend in the books, it’s obvious that shopping has become nearly as identified with Thanksgiving as family and food. It’s become part of the holiday and the weekend — an event almost unto itself.

At Groupon, we love this weekend. (For that matter, we love Black Friday week — the competitive drive seems fixed on making everything start a little earlier every year.) Technically, it’s the same thing we do every other day of the year: connect customers with amazing value and great deals. It’s just on steroids during Black Friday weekend, and I’m excited to report another record-breaking year.

For the full Black Friday through Cyber Monday weekend, Groupon’s North American billings were up 41% compared to last year, and customers purchased 52% more Groupons over the four-day weekend than in 2014. We’re grateful for the support of our customers and thankful for the opportunity to serve them.

Every year, more and more shoppers are starting with Groupon to save money on their shopping and to find something for everyone on their list. There’s a reason Groupon has been routinely listed as a top shopping destination for the weekend this year — because it’s true. We put together an amazing array of deals and ultimately customers agreed. That’s hugely gratifying for our team that’s been working nonstop to build our marketplace.

Like other e-commerce sites and retailers, physical products led the weekend. Given the size of our marketplace, and our team’s ability to uncover hidden gems, I’m always interested to see which deals customers discover at scale. Based on our sales data, a ton of people can expect to find NFL scarf and gloves sets, Apple EarPods and Apple Lightning charging cables, wireless bluetooth anti-loss key trackers, planetarium night light projectors, Wallet Ninjas, shower speakers, 1,200 thread count Egyptian cotton sheets sets, Swarovski Elements necklaces and unbreakable flying helicopters in their holiday hauls this year. I mean, who doesn’t need a ninja in their wallet?

But Goods is only part of the story. Local can win on Black Friday weekend, too.

On the same weekend that the National Retail Federation announced that online shoppers eclipsed brick-and-mortar purchases for the first time ever, Groupon saw a tremendous appetite for local experiences. Over the weekend, more than one in every four Groupons sold was for a restaurant, salon, spa or other local merchant.

That’s the power of a marketplace. That’s the power of our marketplace.

When we talk about the opportunity in Local, and when we talk about Groupon’s role in driving success for small businesses, this is what we’re talking about. We’ve seen first hand that local businesses can compete in an increasingly connected world and against online giants. We’re focused on enabling that competition.

As more and more shopping occurs online, few are as well positioned as Groupon to help local merchants successfully bridge the gap and use the power of our platform to drive physical traffic, awareness and purchases. Groupon’s local commerce marketplace offers local businesses the ability to ride the wave of online shopping, rather than be crushed underneath it.

Black Friday weekend may be behind us, but our work is far from done. We still have millions more gifts to deliver, amazing deals and customers to serve. We also have many more opportunities to give thanks and to help those in need. So please join us in celebrating #GivingTuesday, as we partner with Operation Warm to help provide winter coats to families in need. To donate click here.

Congrats to the Groupon team and our merchants. It was a big win for everyone this weekend.


Why We’ll Win in Local

After two weeks in the CEO chair, a couple of things are abundantly clear…

1) Groupon is a misunderstood company. We’re misunderstood by analysts. We’re misunderstood by media. We’re misunderstood by consumers — both those who haven’t visited our site in awhile and those who’ve never purchased from us. We haven’t done enough to tell our story over the past few years. And we haven’t always been humble about our hits and misses.

2) We are still paying the price for our past mistakes. Not just in the media and with Wall Street, but in the business, every day. We scaled too far, too fast and have had a rough ride. That’s not missed on us; these issues have too often diverted our attention from the kinds of things that a company at our stage should be figuring out.

As a result, and not surprisingly, a few myths have built up over the years. So let’s dispel a few, and then talk about what we’re doing differently moving forward.

MYTH: Groupon is an email daily deal company — This is the biggie. And it’s typically followed up with something along the lines of ‘deals are dead.’

Too many people still think of Groupon as “that daily deal email company.” The reality here is twofold: first, we’re a marketplace — and a big one — one with more than half a million deals in three different categories. Sure, email is still important, but more of our purchases come from on-site search than email, and more than half our purchases occur on mobile. There’s simply nowhere better on the Internet to find awesome local merchants, great products and amazing travel offers and experiences all in one place.

Second, the ‘deals are dead’ line of thinking is tired and not supported. Deals are core to who we are as a company, and we’re not running away from them–not by a long shot. Deals have helped us build the largest transactional platform of its kind in dozens of countries around the globe and a loved brand. We also know that there’s more to our marketplace than deals, including an increasing number of market rate and low discount offers, and new ways to save time as well as money. They’re just in their early stages and we want to move faster to bring them to customers so that they can see clearly the changes for themselves. We’re going to do that, and fast.

MYTH: No one can win in Local — There are a number of big companies — Amazon, Facebook, Google — who’ve tried and died in local. Local is a hard business. As the unquestioned leader at this point, we know that better than anyone. On more than one occasion, we’ve been overly enthusiastic about the potential impact of new products, and we’ve been wrong more than once with how critical it is for us to compete in certain areas. We shouldn’t run from those failures or apologize for them. None of them bet the future of the company. We are pioneering, we are growing, and we are the market leader, which means we know that not every test will come out beaming rainbows and unicorns. Sometimes we will fail, and sometimes we will win, and win big. Winning big is absolutely possible in local. It’s a massive space that remains largely underserved. Consumers and merchants ultimately want that to change, and that makes winning in local possible. We have sold nearly a billion Groupons life to date. Add to that our nearly 50 million active consumer and 1 million merchant customers to date and you have a lot of proof of the possibilities in local.

MYTH: Groupon isn’t growing/Groupon is going out of business — On one hand, this is just lazy. On the other, that this is misunderstood is largely on us. We’ve definitely grown: since going public, we’ve grown billings and revenue by over 90%; we’ve had seven consecutive quarters of double-digit billings growth in North America; we’ve doubled our customers over the past five years; we’ve increased the number of deals on our platform by 500x since we went public in 2011; etc.; etc. What we haven’t done is consistently meet the expectations we set. We’re not growing the way we believe we can grow given the size of the opportunity in local and the potential in our platform. Both of those are going to change. More on that in a bit.

MYTH: Groupon is bad for businesses — We don’t hear this much anymore, but it still comes up on occasion. Our #1 complaint from merchants these days? They want to sell more Groupons.

The vast majority of our deals (82% as of the last report) are breakeven or better on the deal itself (i.e., no overspend or cross-sell required). That is simply unheard of in high volume small business advertising and customer acquisition. But let’s be clear: we still have to improve here. Not every brand or business is comfortable with deep discounts. We want to give more merchants more opportunities to run on our platform at lower discounts and with market rate offerings. You can see some of those opportunities today with Groupon To Go–more are coming.

So that’s that. Let’s talk about why I think we have what it takes to win.

First is our team. It’s amazing and one of our biggest assets. I can’t think of another team with more experience in local and that’s thrived with so many people betting against it. I’m honored and humbled to be a part of this team.

Then it’s our customers. We’re approaching 50 million customers worldwide and have worked with more than a million merchants to date. We have a loved brand with over 80% awareness in North America, and net promoter and customer satisfaction scores in line with the world’s best brands.

Next is a strong underlying model with a simple value prop that works for both consumers and merchants. Our business has weathered everything from email headwinds to a full marketplace transition–all while maintaining healthy fundamentals and selling nearly a billion Groupons (and counting). Why? Because consumers love to save money and merchants love to acquire new customers.

Last, we have unprecedented experience in local, and what we believe is the right vision and strategy to make our goal of becoming the daily habit in local a reality.

This is a powerful combination of advantages that’s very, very hard to replicate. So what are we going to do with them?

Given these advantages and the opportunity in local, we believe we can and should grow much faster. To enable that growth at a larger scale, we are focusing on three major strategic changes.

First, we are dramatically shifting our marketing strategy in order to drive millions more new customers to our marketplace. Core focus and investment in new customers isn’t a nice-to-have for a business at our stage, it’s a requirement.

Second, we are further simplifying and streamlining our business, in particular our international segments. This means moving to more shared services for economies of scale, and it means better picking our battles–exiting or partnering in countries where we don’t believe we can win or where winning will require more time, technology and investment than we should manage. And, in some markets where we’re seeing results — Australia, France, Germany, Italy and UK, to name a few — it means increasing our investment to better capitalize on the opportunity.

Third, we are moving away from empty calories in Shopping. We will no longer emphasize the higher revenue but lower margin consumer electronics business that we believe isn’t required in order to grow a sustainable, healthy Shopping business with stronger margins.

These are admittedly major shifts in our strategy for a new CEO who has been in the job for what amounts to a handful of days. I’ve been here for over 4 years however, and as I said before, I don’t need the proverbial 100 days to know that these are the right decisions. We simply can’t expect to win if we’re not willing to double down on what’s working and walk away from what’s not. And why wait to do the right thing?

With all these changes, there are some very important things that are staying 100% the same: our mission to connect local commerce; and our vision to build the daily habit for local commerce, the marketplace where people discover and save on amazing things to eat, see, do and buy in their neighborhood.

The same core market realities that brought me here over 4 years ago still exist today: local businesses have an incredibly hard time standing out and getting people to give them a shot; consumers want to save money and discover new things to eat, see, do and buy in their neighborhood. What’s changed in the last 4 years is that Groupon now better addresses these two market realities than anyone. And we’re still just getting started.

A lot of people have told me that I’m taking over the reins of this company in a very dark time. Plenty have said that I’m nuts to take this on. Without question, no one is handing us the keys to local with a big red bow tied around them. And while I’m shaking things up, I assure you that I’m not crazy. So I don’t look at this as a dark time. I look at this as a time to make things happen, faster. It’s the time to realize our potential and make Groupon better for merchants, for consumers, for employees and for shareholders.

On that note, I believe strongly that a better Groupon matters. It matters because local matters; neighborhoods matter. Part of what makes neighborhoods special are the businesses that line their streets and create hubs, energy and connections for communities. Groupon gives those businesses tools to grow and thrive. When local businesses thrive, neighborhoods win. I don’t know about you, but I think that matters, a lot.

I couldn’t be more excited about the opportunity to lead Groupon, and I’m looking forward to our next great chapter together.*

*This post contains forward looking statements. Groupon’s third quarter 2015 earnings materials, including a message on the use of forward looking statements, are available at www.groupon.com under the heading “Investor Relations.”


One Playbook: The next chapter at Groupon

Two years ago, we started the ambitious process of unifying our global technology platforms, tools and processes. This One Playbook initiative was designed to help us replace years of technical debt and disparate operations with the products, tools and processes that drive our North American business. Our goal was to set the stage for Groupon’s next chapter–as a global company, with more leverage and efficiency in our core operations, and a stronger platform for growth.

It’s been a huge undertaking, and we still have work to do, but our Operations teams, Engineering teams and many, many others have made amazing progress. Simply put, we are a stronger, faster Groupon today because of this work.

We’re also now in a position to realize the efficiencies we’ve been working so hard to gain, to further improve the way we operate around the world and — most importantly — continue to channel more and more of our resources toward long-term growth. Practically, this means we’re taking some broad restructuring actions to better focus our resources and streamline our international operations.

Over the next several months we will eliminate approximately 1,100 positions, primarily in international Deal Factory and Customer Service. Our teams have done great work to streamline our operations in these and other areas, and our global capabilities and strong regional service centers allow us to do more with less while still providing the high level of service our customers expect and trust.

Alongside this process, we’ve also taken a close, honest look at where we do business. We saw that the investment required to bring our technology, tools and marketplace to every one of our 40+ countries isn’t commensurate with the return at this point. We believe that in order for our geographic footprint to be an even bigger advantage, we need to focus our energy and dollars on fewer countries. So, we decided to exit a number of countries where the required investment and market potential don’t align. You likely saw that we recently exited Greece and Turkey. We are also ceasing operations in Morocco, Panama, The Philippines, Puerto Rico, Taiwan, Thailand and Uruguay.

Let’s be clear: these are tough actions to take, especially when we believe we’re stronger than ever. We’re doing all we can to make these transitions as easy as possible, but it’s not easy to lose some great members of the Groupon family. Yet just as our business has evolved from a largely hand-managed daily deal site to a true ecommerce technology platform, our operational model has to evolve. Evolution is hard, but it’s a necessary part of our journey. It’s also part of our DNA as a company and is one of the things that will help us realize our vision of creating the daily habit in local commerce.

Last, while this is a lot of change, here’s what’s not changing: Our mission to connect local commerce; our commitment to delivering great deals to our customers and real value to our merchants and our belief that Groupon is a unique and amazing place to work.

Thank you for your commitment and your partnership on this journey. We expect the next stage for Groupon will be our best.

 


Yes, Virginia, You Can Support Local Merchants & Still Find Great Prices.

The December shopping season can be a frenzy: a sometimes hysteric competition to get a great price, and a mad dash to buy a gift – any gift – before the deadline. The countdown may be on, but for thousands of pondering shoppers and procrastinators, the end of holiday shopping season doesn’t have to be a maddening scramble of parking lots, lines, and gifts that trade value for thoughtfulness.  There’s a way to give great gifts that feel great to give: Buy Local from Groupon.

Buy Local launched earlier today at groupon.com/buylocal. It’s our way of sending a little extra cheer to local businesses and saying ‘thanks’ to our subscribers for supporting these merchants and their local economies. With Buy Local, the first 150,000 customers who register and buy a local deal on Groupon as a gift will receive 10 bucks in their Groupon accounts. Getting 10 bucks for supporting local businesses is easy:

  1. Register at groupon.com/buylocal
  2. Browse hundreds of gift options from local businesses, from exotic car driving experiences (hello!) and ice skating to family museum memberships and sushi-making classes
  3. Buy from a local business before 12/24/11
  4. Get 10 bucks in your account—maybe as a personal reward for shoveling the entire driveway, that fifth trip to the airport or making it through the holidays with the in-laws

Buy Local is further proof that shoppers don’t have to make the tough tradeoff of supporting local businesses and getting great prices.  And it’s an extra bonus for those of us who have waited until the last minute to find the perfect gift.

Happy Grouponicus, and thanks for the opportunity to showcase amazing local businesses and provide what we hope will be your favorite gifts for family and friends.

Think you’ve found the coolest gift ideas on the site today? Let’s see them in the comments below!