Will Mobile Save Groupon?

Last week, financial analysts with Deutsche Bank upgraded Groupon's stock from hold to buy, pointing to the company's growing mobile sales and its strong position as a mobile ecommerce merchant. Following the upgrade, Groupon's shares jumped 12 percent and continued to trade at that level.

These fluctuations happen periodically but the incident raises a compelling question: How critical a role is mobile playing with Groupon, a company that has been recently struggling and fired its founder and CEO?

"Groupon has a product that is well suited for the mobile platform, in that it can be provided in a primarily graphic format, rather than a text-based one, which is difficult to use on a mobile device's small screen," David Kaminsky, emerging technologies analyst at Mercator Advisory Group, told Mobile Commerce Daily. "The mobile platform also enables Groupon to use a consumer's location to distribute local offers."

In the analyst note from Deutsche Bank, Groupon was singled out as the most mobile penetrated ecommerce company that it tracks. The note also forecasts that Groupon's sales will grow 53 percent to reach a total of $3.56 billion in 2015, driven in part by an increase in mobile sales.

Groupon recently reported that mobile accounted for 45 percent of all of its transactions in North America in the first quarter, up from less than 30 percent during the same period a year ago.

Groupon's mobile opportunity is clear, but it goes far beyond text versus graphics. As consumers are traveling—and that might mean something as pedestrian as being 30 minutes from home—they are in need of services and food and are not familiar with local establishments. To the extent that Groupon can train shoppers to use the phone to access the Groupon app on the run, it's mobile strategy could indeed make a difference.

But it needs to deliver the goods, meaning quality merchants with truly compelling deals. Apple gives us two great examples, with Siri and the iPhone's native Maps app. Even though it had every advantage a mobile app could dream of (the hottest platform, installed by default, extensive integration with core phone functions, etc.), both fell victim to superior mobile offerings from Google. Even Apple had to suffer the humiliation of suggesting that users temporarily use Google Maps.

That cautionary tale said, Groupon has proven itself quite adept at landing the good deals with significant retailers. Can it train consumers to think of its mobile app as the default store and restaurant search? It's corporate life may well depend on it.

For more:
- See Mobile Commerce Daily story

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