The Wall Street Journal : Groupon Buys Rivals in Japan and Russia
Groupon Buys Rivals in Japan and Russia
Groupon Inc., a website that offers daily deals from local businesses, is continuing a global acquisition spree by buying rivals in Japan and Russia.
The Chicago-based e-commerce company says it has purchased a majority stake in local sale sites Qpod Inc. of Japan and Darberry Inc. of Russia, and plans to rename both Groupon. Terms of the deals weren't disclosed.
"We are dedicated to being the company that defines the daily deal market," said Rob Solomon, Groupon's president and chief operating officer. "Having a global footprint has been very helpful to the Amazons and eBays of the world."
Groupon, whose name is a combination of "group" and "coupon," offers consumers discounts each day that come from restaurants and other local businesses. The closely held company was on track to earn revenue for this year of at least $300 million in North America and $50 million in Europe before the latest deals, Mr. Solomon said. With the addition of Japan and Russia, he expects the company's global revenue next year to be well above $500 million, with as much as 40% coming from international markets.
Mr. Solomon said that Groupon management has been focusing its efforts on building out its North American business, and decided it was faster to grow internationally through acquisitions. "These companies are the best in their markets," he said.
Groupon, which had previously operated in 165 markets, as a result of the latest deals expects to offer daily deals in 230 markets and 29 countries. In May, it acquired the Berlin-based City Deal GmbH to expand into some 80 European markets.
The company received a $135 million investment in April from Russian investment firm Digital Sky Technologies Ltd. and Battery Ventures that valued the company at about $1.35 billion. The company has raised some $170 million from investors, but declined to say how much it has spent on acquisitions. In the last five months, Groupon has grown from 200 employees to more than 1,500.
Groupon's simple business model has given rise to a range of competitors, including Thrillist and LivingSocial, as well as so-called "flash sale" sites such as Gilt Groupe, which has been rolling out weekly offers of markdown items in cities including San Francisco.
Yet Mr. Solomon said that his company's growth is showing no signs of flagging. The rate at which the company's 13 million registered consumers open emails featuring the company's deals has stayed constant, indicating that customers haven't tired of checking out its offerings each day.
The company's rapid acquisition strategy is common among Internet services companies, said Patricia Nakache, general partner at Trinity Ventures, which has invested in Internet companies such as Blue Nile Inc., Care.com Inc., and thredUP Inc.
"If you find a customer proposition that is working, it makes sense to grow as fast as possible before clones pop up," said Ms. Nakache. Moreover, larger Internet companies benefit from advantages such as lower prices on media to acquire new customers, she said. Groupon, in particular, could use their scale and brand to attract more local businesses to use their site, she said.