Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Why I Sold My Groupon Inc (GRPN) Stock

Page 1 of 2

Last week, I exited my position in Groupon Inc (NASDAQ:GRPN). Although it’s been a great performer since last November, the company seems to be struggling in its transition away from daily deals.

In particular, there are quality control issues with the company’s goods and vacation businesses. At this point, the idea that Groupon could challenge, Inc. (NASDAQ:AMZN) or eBay Inc (NASDAQ:EBAY) in online commerce seems far-fetched.

Groupon Inc (NASDAQ:GRPN)

Groupon gets away from daily deals

In recent months, Groupon Inc (NASDAQ:GRPNhas been transitioning away from the daily deals that made it famous. Now, Groupon is attempting to become a deals marketplace, a site for consumers to browse and buy long-lasting local deals, goods and vacations.

This has led some to compare Groupon’s latest strategy to Amazon or eBay Inc (NASDAQ:EBAY). Motley Fool’s own Tim Brugger asked, “Is Groupon Trying to Become the Next Amazon?

The problem with Groupon Goods

In discussions with analysts and investors, Groupon Inc (NASDAQ:GRPN) has been emphasizing its Goods business. With Goods, Groupon leverages its audience of deal seekers to sell items that would have otherwise been difficult to move. (Examples include refurbished laptops, off-brand smartphone cases and subscriptions to “-of the month” clubs.)

From a business perspective, Goods has some challenges — namely, margins. As Groupon Inc (NASDAQ:GRPN) has limited expertise in selling physical goods, it must outsource its warehousing and shipping. Right now, the company is only targeting a margin in the high single digits.

But the bigger problem might be the actual process of buying goods from Groupon. Put simply, it’s awful.

To test the process out, I bought a speaker set off Groupon Goods nearly two weeks ago. As I write this, Groupon still hasn’t shipped it. Groupon freely admits that its goods can take some time to arrive (“most items are shipped within 2 and a half weeks”) but that still doesn’t change the fact that it’s a terrible experience for the customer.

I could’ve bought the same item from, Inc. (NASDAQ:AMZN). It would’ve cost me 25% more, but as a Prime subscriber, I would’ve had it within two days. As it stands, I have no idea when I’ll receive the speakers — making Groupon Goods useless for any time-sensitive shopping.

And I’m not alone — reviews of Groupon Goods around the web are particularly scathing.

Groupon’s nightmare vacations

Another area of Groupon Inc (NASDAQ:GRPN)’s business — Groupon Getaways — might have even worse quality control.

Last week, ABC News slammed Groupon for a vacation deal. According to ABC, a resort in the Dominican Republic was misrepresenting both the size of the discount offered and the quality of its accommodations.

Groupon removed the deal from its site, and issued refunds to the customers that had bought it. However, as Groupon is asking its customers to pony up hundreds or thousands of dollars upfront, a poor reputation could wreak havoc on vacation sales.

Competition from Amazon and eBay

While Groupon Inc (NASDAQ:GRPN) works to become more like Amazon or eBay, those companies are going after Groupon’s core business.

Page 1 of 2

Biotech Stock Alert - 20% Guaranteed Return in One Year

Hedge Funds and Insiders Are Piling Into

One of 2015's best hedge funds and two insiders snapped up shares of this medical device stock recently. We believe its transformative and disruptive device will storm the $3+ billion market and help it achieve 500%-1000% gains in 3 years.

Get your FREE REPORT and the details of our 20% return guarantee today.

Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.
Loading Comments...

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 102% in 3 years!! Wondering How?

Download a complete edition of our newsletter for free!