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Tuesday, Aug 27
Groupon looking to buy warehouses, take on Amazon
- CEO Eric Lefkofsky says Groupon (GRPN) is looking to buy at least 3 warehouses to support its direct e-commerce sales/fulfillment efforts. A Kentucky facility has already been singled out for acquisition.
- Groupon's e-commerce sales have been taking off. Revenue for Groupon's Goods e-commerce platform jumped 69% Y/Y in Q2 to $241.8M, accounting for 40% of revenue and helping offset slumping daily deals sales. Moreover, Groupon's direct revenue (inc. a large chunk of Goods sales) rose 190% Y/Y to $190M.
- However, this growth has pressured Groupon's gross margin. Lefkofsky argues creating warehouses and bringing shipping/fulfillment in-house will improve margins.
- Last December, Groupon bought CommerceInterface, a provider of channel management software for retailers, manufacturers, and distributors, to improve Goods' order execution.
- By creating a fulfillment infrastructure, Groupon is looking to mount a challenge to Amazon (AMZN), which has been building warehouses left and right, and now derives 40% of its unit sales from 3rd-party merchants.