Beyond The Daily Deal: Groupon’s 170M Deals And 33M Users; Aims To Be ‘The OS For Local Commerce’

Groupon’s CEO Andrew Mason today posted a letter to shareholders with some updated figures on how the company is doing, and a more specific outline of what Groupon plans to do to to move beyond daily deals: ”To become the operating system for local commerce.”

The move is a significant one as Groupon attempts to shore up investor confidence amidst a series of accounting issues, and the fact that some believe interest in the basic service of daily deals is beginning to wane.

It also underscores some of the challenges Groupon still faces as a company. Mason notes that at the moment there are “10 million geo-located subscribers engaging with Groupon every month who have yet to make a purchase.”

“Though the six months since our IPO have been rocky to say the least, the fundamentals of our business have continued to improve,” wrote Mason in the letter.

Mason’s letter today (on Groupon’s blog and also filed with the SEC), is a long one, and here are some of the highlights.

First he took investors through some of its milestone usage figures:

The company has now sold 170 million Groupons to date and counts 33 million active customers and 250,000 merchants in 48 countries.
In 2011, $2 billion in business sent to “Main Street” small merchants.
Also in 2011, 11 new products launched, including a several that take the company away from the daily deals format Groupon Goods, Getaways, Rewards, Now!, and Scheduler.
11 acquisitions, including several in the mobile space in the year.

Meanwhile, Mason’s description of the next phase for Groupon is light on the specifics of what it will do, but essentially, the plan is for the the company to integrate those acquisitions and more in an attempt to create a platform for local commerce — which Mason says is a multi-trillion-dollar business.

“Today, Groupon is a marketing tool that connects consumers and merchants. Tomorrow, we aim to move upstream and serve as the entry point for local transactions,” he writes.

Mason notes that there have been several key achievements already in its plan to develop a platform. Among them, he says the company is continuing to hone its personalization algorithm. (His example is the area of SmartDeals in Chicago, which he says have a 50 percent higher purchase rate than emails sent without them — and if that means less offers for vajazzles for me, well then that’s awesome news.)

Mason says that Groupon is now rolling out SmartDeals outside of the U.S., with a broad rollout planned by the end of 2012.

Mobile is another area where Groupon is going large — not just in terms of acquisitions. That’s because apparently, according to Mason, the average Groupon mobile user spends more than 50 percent more than those who are not using mobile.

He notes that last month (April) nearly 30 percent of North American transactions were completed on mobile devices — although that doesn’t seem like much of an improvement than four months ago when it was 25 percent.

Mason doesn’t go into detail on this here, but Groupon has, among other acquisitions, bought companies that bring it closer to the point of sale so we may well see the company offering more services here and trying to be more active in the mobile payments space.

Mason also noted that its non-daily deal service — Groupon Now — has recently passed the 1.5 million items purchased mark. That’s a fair distance still from Amazon and other companies that are more established in straight e-commerce, but it’s a start.

Groupon Rewards, the company’s loyalty program, has now signed up about 30 percent of all eligible daily deal merchants.

And the company’s booking management service, Groupon Scheduler, is in the process of being upgraded, Mason says, with plans to offer “a fully automated yield management system for every local business.”

He notes: “Scheduler embodies our intent to provide every mom and pop store with powerful technology solutions that were once reserved for sophisticated corporations with multimillion-dollar budgets.”

“The company has seen revenues grow by 415 percent over 2010 to $1.6 billion in 2011, noted Mason, with its operating margin still showing the company at a loss — but significantly less so than before: it’s now at -14 percent for the full year compared to -134 percent a year ago. In terms of earns per share that loss is down to $0.12 compared to $0.48 a year ago.