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Groupon Adds Velvet Rope, Goes on a Shopping Spree

Posted by Sheila Shayon on February 20, 2012 05:30 PM

Groupon CEO Andrew Mason was bullish at the 2012 Goldman Sachs Technology and Internet Conference last week, where he commented, "We've cracked the code…at this point, when we think of the competitive landscape, we think that the biggest competitors are ourselves." 

It’s a bit of bravado midst a range of troubles besieging Groupon lately including 17 lawsuits brought against the company claiming they and other retailers violate federal and state consumer protection laws regarding voucher expiration dates and provisions about single transaction usage.

“Groupon effectively creates a sense of urgency among consumers to quickly purchase ‘groupon’ gift certificates by offering ‘daily deals’ for a short amount of time,” according to the first case filed last year, reported Bloomberg. “Consumers therefore feel pressured and are rushed into buying the gift certificates and unwittingly become subject to the onerous sales conditions.”

March 12th is the projected date for settlement of the class-action lawsuits. After raising $700 million in its IPO last November, Mason is committed to staying ahead of the competition, specifically, LivingSocial. "Our goal is six months from now, when you go to Groupon, it’s going to look and feel very different," Mason was quoted by Bloomberg. "It’s going to be a much more robust and refined service that immediately jumps off the page."

Part of upgrading its brand perception includes tapping photographers for original shots of local businesses deals to replace stock photos and increased focus on Groupon Now links to deals good for a limited window.

It's also doing some buying of its own. The site recently acquired Hyperpublic, a location-based technology company whose API ("Geo Deals & Events") shows local deals and events tied to a user’s location. Hyperpublic follows Groupon’s recent acquisition of Adku, a startup that handles e-commerce data. 

“For those entities using the API, Hyperpublic will pay a fee for each click-through to an offer. In a blog post from last September, Hyperpublic wrote that performance-based rates would be forthcoming,” according to ComputerWorld.com. 

In a bid to increase the frequency of transactions per member, Groupon is testing VIP Memberships for $29.99, a premium loyalty program that offers members:

• Early deals access, 12 hours ahead of non-members

• Access to a “Deal Vault” even after they’re sold out or purchase-by date has expired

• Refunds made easier, VIP members can trade in unused daily deals for Groupon Bucks at any time, even after deal expiration date.

The subscription-based loyalty program is free for the first three-months. Groupon’s Julie Mossler calls it "a must-have for Groupon addicts."

LivingSocial has been testing a similar service, LivingSocialPlus, that costs $20 for early access to special and closed deals, plus $5 additional credit monthly; Amazon Prime, Amazon.com's loyalty program, costs $79/year for free two-day shipping and perks on video rentals.

Groupon is giving its revamped website a ‘thumbs up’ and ‘thumbs down’ feature according to Bloomberg, so as to better serve its 33 million users with tailored deals and to reduce redundancy of unwanted deals, as well as the ability to store multiple locations, such as home and workplaces.

This tweak "also helps to remove some of the worst infractions in our deal selection for users that don't want to receive certain types of deals," Mason told the Chicago Tribune

"We have not done nearly as much as we can or will to leverage social. There's sharing that happens naturally, but there's not a lot of functionality that you would look at built into Groupon and say That feels like a very social feature.' So you can expect more of that from us.”

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