RetailMeNot Inc (NASDAQ:SALE) hit the market with a bang, with its stock soaring 34% in the first day. The company was already a success before announcing its IPO, with more than one billion visits in the past seven years. In 2012, RetailMeNot was receiving more than 24 million unique visits each month.
Like Groupon Inc (NASDAQ:GRPN) and Amazon.com, Inc. (NASDAQ:AMZN) Local, RetailMeNot Inc (NASDAQ:SALE) has re-imagined the coupon concept for the digital world. But RetailMeNot Inc (NASDAQ:SALE) is quite different from these competitors in that it provides coupon codes for consumers to copy and paste into online retail sites in order to get discounts. But, as we’ve discovered with Groupon, consumers can easily grow restless with online discount providers.
Learning from Groupon
Groupon Inc (NASDAQ:GRPN) launched its IPO in late 2011, with an initial stock price of $20 a share. RetailMeNot Inc (NASDAQ:SALE)’s initial stock price was $21 per share, with the IPO raising $191 million.
But in its first year, Groupon found itself embroiled in a scandal, as information came to light that the company didn’t have proper controls in place when it made the offering. While it was legal to omit this from its initial paperwork, the company’s stock plunged 17% when the information finally came out.
In its most recent quarterly earnings report, Groupon Inc (NASDAQ:GRPN) revealed an 8% increase in revenue over the past year, with $601.4 million in its last quarter. While the company has trouble in its international markets, with revenue dropping 18% overseas, this was offset by domestic revenue growth of 42%.
How has Groupon done it? The company has embraced its mobile strategy, which is something that could help RetailMeNot. Today’s consumers are shopping on the go, with mobile device in hand, and RetailMeNot Inc (NASDAQ:SALE)’s copy-and-paste coupon code business model could become problematic, especially for those shoppers engaging in “showrooming.” With showrooming, a customer is checking prices while standing in a bricks-and-mortar store–a process that could leave RetailMeNot Inc (NASDAQ:SALE) out.
One of Groupon’s main competitors is Amazon.com, Inc. (NASDAQ:AMZN), who not only owns a stake in deal site Living Social, but also has launched its own competing service, Amazon Local. The site is all-too-aware of the increase in showrooming and even builds in deals from multiple companies into a “New and Used Offers” option.