Groupon has changed its operating model to one that could give restaurants more control over their offers and a bigger slice of the revenue they produce.
The group-buying pioneer — which reportedly may soon be acquired by tech giant Google — has launched two new features: Groupon Stores and the Deal Feed.
Groupon Stores lets restaurants and other businesses set up an online storefront — much like a page on Facebook Places — where they can offer Groupon discounts whenever they would like, as opposed to waiting up to several months to have an offer featured as the website’s Deal of the Day.
The Deal Feed is a feature for consumers in which they can “follow” their favorite restaurants and merchants — similar to a Twitter feed — to be notified of all deals offered from the Groupon Stores.
Groupon’s founder and chief executive, Andrew Mason, wrote on the company’s blog that the site’s original one-deal-per-day format was necessary when, as a startup in 2008, the website lacked the hundreds of thousands of merchant relationships and reported 35 million users it has today.
“Today things are different,” he wrote. “Our biggest problem is that demand is so high, merchants often wait months to be featured. And while we once only had a few thousand customers per city, now we have hundreds of thousands — Chicago just added its millionth subscriber — making it increasingly difficult to find one deal that satisfies everyone.”
Mason said the new features have begun this week in Chicago, Dallas and Seattle, with more cities to be added soon.
The site’s payback structure for merchants also will change with Groupon Stores and the Deal Feed.
Before, restaurants running a Groupon offer only as the site’s Deal of the Day would distribute a discount offer, like $50 worth of food for $25, and would keep 50 percent of the money from Groupons sold. By setting up a Groupon Store, a restaurant now would keep 90 percent of the revenue from the sale of Groupons. If the restaurant signs up to run a “Promoted Deal,” in which Groupon advertises the offer to all its subscribers in the eatery’s city, the restaurant then would keep 70 percent of the revenue.
If restaurants don’t opt for a Promoted Deal, the offer would be seen first by Groupon users who follow the eatery and have its discounts posted in their Deal Feeds. The new Groupon Stores model features integration with e-mail, Facebook and Twitter to spread word of offers through restaurants’ established social-media channels.
Google’s bid for Groupon reportedly includes a $5.3 billion acquisition plus $700 million in performance incentives for Groupon executives. A source close to Groupon quoted in the New York Times said the website’s customer base tripled this summer to 35 million users and that Groupon’s annual revenue exceeds $1 billion.
Contact Mark Brandau at [email protected].