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Groupon developing local commerce "operating system"

Groupon may be overhauling its product to provide end-to-end support for local businesses

Technology trends and news by Faith Merino
July 13, 2012 | Comments
Short URL: http://vator.tv/n/285a

Groupon’s stock has seen better days.  Since the company made its public debut last November, its share price has fallen from a high of $26.19 to just under $8 as of Friday.  Lo, how the mighty have fallen.  Can Groupon rebound from that?  A serious overhaul may be in order—and it looks like that’s exactly what the company has in mind, according to a report from Bloomberg Businessweek, which is saying that Groupon is looking at creating a new “operating system” for local commerce.

The details are a little nebulous, but the idea is to connect and streamline all operations in a Main Street store, from advertising and the point-of-sale, to loyalty services that draw customers back.  At present, much of a mom-and-pop store’s business is disjointed and requires a lot of man hours to manually add up sales and tax.  CEO Andrew Mason’s aim is to release a suite of software and technology services that would essentially link all of the disconnected systems together.

“Right now, we’re just this advertising solution,” Mason explained. “If we can come up with an ecosystem that local merchants use to run their business and it’s connected to consumers, then I think that’s a pretty sizable business.”

The solution is reportedly already being tested by a number of merchants across the country.  Groupon has actually developed a device with the help of hardware maker Infinite Peripherals that connects a credit card scanner attached to an iPad to a cash register app that keeps track of all transactions, daily income, tax, and so on. 

Sounds a lot like Square.

But the idea is to bridge the gap between merchants’ daily business realities with all of the amenities that Groupon offers—advertising, rewards, appointment booking, etc.  And then Mason sees the system also providing a Yellowpages-like service to consumers.

Will it turn Groupon’s downward trajectory around?  There is the very basic reality that Groupon doesn’t do anything outside of advertising.  Groupon gets the customers.  It’s hard to imagine Groupon successfully taking on Square’s market as well.

But the company hasn’t just been hurt by flagging interest in email coupons.  In many ways, Groupon has become its own worst enemy.  Its accounting problems started before it went public, when it was forced—more than once—to revise its prospectus to more accurately reflect its true earnings.  A dismal Q4 2011 earnings report revealed a net loss of $42.7 million.  The company later revised its earnings to reflect the fact that Groupon refunds were higher than previously estimated, which lowered revenue by an additional $14.3 million and net income by $22.7 million.

So, even if a major product overhaul doesn’t help, it certainly can’t hurt.

 

Image source: fastcompany.com


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