Groupon gets fashionable with $43M ideeli acquisition

The acquisition marks Groupon's first foray into the fashion/apparel space

Groupon has renewed its love of buying startups these last few months. There was a six- or seven-month lull between Andrew Mason’s ouster and Eric Lefkofsky’s official installment as CEO, but the acquisition spree has been rejuvenated. Just days after closing its acquisition of Ticket Monster from LivingSocial for $260 million, it has acquired fashion flash sale site ideeli for $43 million in cash.

The acquisition marks Groupon’s first real foray into the fashion/apparel space. A Groupon spokesperson tells me that while the company has never had a dedicated presence in the fashion/apparel industry, its subscribers have always had a big appetite for deals on fashion and accessories. Last month, over 25,000 subscribers bought $35 Gap gift cards worth $50.

Groupon is getting a great deal on ideeli (ha), paying less than half of what ideeli has raised to date. Founded in 2007, ideeli has raised $107 million from Kodiak Venture Partners, betaworks, Constellation Ventures, StarVest Partners, Next World Capital, Cue Ball, and Credit Suisse. The company will stay in its current headquarters in New York City and will continue to operate as a separate website.

But ideeli hasn’t had such a great ride. The company generated $115 million in revenue in 2012 and saw a $30 million net loss. Ouch. The reality is that while flash sales were big during the worst of the recession, they’ve pretty much gone the way of the daily deal—hence the reason why former flash sale sites like Fab.com are pushing into a more traditional e-commerce model. (The big exception to this, of course, would be Zulily, which posted a [small] profit of $155,000 in 2013. Zulily shares are up more than 80% since its IPO in November.)

“We are thrilled to add ideeli and their team to our company,” said Groupon CEO Eric Lefkofsky, in a statement. “Ideeli extends our fashion presence and brings great relationships with many of the top brands in apparel. Our customers have a demonstrated appetite for these offers, and by broadening our reach in this space Groupon is even better positioned as the place you start when you want to do or buy just about anything, anytime, anywhere.”

Groupon has been making a concerted effort as of late to branch into different product categories, likely as part of its overall pull strategy (getting subscribers to stay on the site and search for deals rather than pushing deals via email). Notably, there was Ticket Monster, which closed earlier this month. Before that, there was SideTour for local activities. And prior to that acquisition, there was last-minute hotel booking app Blink.

So now that Groupon has made moves into fashion, events, hotels, and local goings-on, what will come next? My guess: petting zoos. 

Correction: Groupon is already in the petting zoo space.