Groupon (Nasdaq:GRPN) announced Monday that it has inked a deal to acquire flash-sales site Ideeli for $43 million as the company aims to expand beyond discount deals and into selling physical merchandise.
As e-commerce continues to soar, the new deal will position Groupon to compete with other successful flash sale companies, such as Gilt, Hautelook and Amazon-owned MyHabit. Groupon Goods sold $454.7 million worth of discounted merchandise in 2012, a sharp increase from $20.8 million a year earlier. The success of selling physical merchandise led Groupon to open its first distribution center in November.
"Ideeli extends our fashion presence and brings great relationships with many of the top brands in apparel," said Groupon CEO Eric Lefkofsky in a statement. "Our customers have a demonstrated appetite for these offers, and by broadening our reach in this space Groupon is even better positioned as the place you start when you want to do or buy just about anything, anytime, anywhere."
The Ideeli purchase is the latest for Groupon, which recently acquired Blink, a European last-minute travel deals site, and Ticket Monster, a Korean e-commerce company formerly owned by Groupon rival LivingSocial. It's been a tough few years for daily-deals sites like Living Social and Rue La La, who have faced troubles ranging from plummeting revenues to lawsuits claiming that the gift certificates have misleading expiration dates. Just last week, Living Social CEO Tim O'Shaughnessy announced he would be stepping down from the helm of the company he cofounded. Although no official reason was given for his departure, industry sources suspect it has something to do with the company's declining sales. In the most recent quarter, Living Social posted a $25 million Q3 loss.
Ideeli will maintain its headquarters in New York and will continue to operate as a separate website. Groupon is headquartered in Chicago.
For more see:
This Groupon press release
Groupon Plans Warehouses, Wants To Compete With Amazon, Costco
Groupon Launches Digital Couponing Service, Freebies
Groupon Reports Light Quarterly Growth, Aquires Korean Deal Website
LivingSocial Suffers $25 Million Loss in Third Quarter
Groupon Announces Senior Hires in International Operations and Technology