In the past year, since it went public, Groupon has become more and more reliant on its Groupon Goods arm to to remain profitable. Whereas Groupon was once known for providing coupons to brick-and-mortar stores, Goods expanded daily deals to online retailing.
So, in order to help improve the service that is keeping the company afloat, Groupon purchased channel management technology company CommerceInterface Friday. Terms of the deal were not disclosed.
What CommerceInterface does is help manufacturers, distributors and retailers succeed at managing their businesses and selling online. It offers a platform to merchants, which aids them with listing their products on different marketplaces, including eBay, Amazon and Fab.
Obviously, now that it has been acquired, CommerceInterface will be providing this service exclusively to merchants wanting to post to Groupon Goods from now on. Its current customers will be given the option to transition to other vendors over the next six months with migration support from the company.
Groupon had been using CommerceInterface technology to “streamline operations of the growing Groupon Goods platform and automate interactions with thousands of existing vendors” since April. By purchasing the company, Groupon can leverage CommerceInterface’s infrastructure and optimize Groupon Goods.
"CommerceInterface has proven to be an important piece of Groupon Goods infrastructure in the U.S., quickly and reliably streamlining the execution of orders and other vendor interactions," Faisal Masud, head of Groupon Goods, said in a statement. "We look forward to enhancing our abilities to better support merchants overseas beginning early next year."
In a blogpost on the company’s homepage, CommerceInterface Founder and President Ivan Ramirez explained why he sold his company to Groupon.
“In early 2012, we started providing our supply chain technology to Groupon Goods in order to support their growing network of vendors. The growth of Groupon Goods was astonishing and the adoption for our technology across the Goods business was impressive,” Ramirez wrote.“This is where the love affair began! We shared the same passion for using technology to relieve operational burdens and to scale rapidly. The scope of the project was becoming too big to have Groupon Goods as just another CommerceInterface customer.”
Groupon Goods has become crucial for the survival of Groupon. CEO Andrew Mason may have said recently that Groupon sees itself as primarily a local e-commerce company that is aiming to “enable the same kind of revolution that Amazon led with four or five years ago,” except with local businesses. But it actually Groupon Goods, its online retail arm, that is keeping the company above water.
In its most recent quarterly earnings report, Groupon reported that Goods had brought in $1.5 billion in gross billings and $500 million in revenue. Groupon’s total revenue for the quarter was $568.6 million.
Groupon also touted its new 200 millionth subscriber milestone, but only 39.5 million of those users are considered active. That is an increase of 37% over last year, and is likely due to Groupon Goods.
Groupon shares were up 0.61% on Friday, and are now trading at $4.82 a share.
(Image source: http://www.commerceinterface.com)