Last week, we covered the launch of Groupon’s Goods (which I will call GG for short) ‘marketplace’ here. It looks like the deals are running every week now as it’s Wednesday and folks around the office started to get fresh deals (more on that in a second). In my original post on Groupon Goods, I theorised that if Groupon could do a deal a day, they could get this up to a multi-billion dollar GMV business pretty quick.
Let’s check in on that thesis.
How was week one?
The first week for GG was a solid showing. As you can see in this table, GG drove $2m in GMV during the first week.
The standout performer was the $40 Altec lansing iPod Dock which drove an amazing 28k units for > $1m in sales or half of the GMV for the week. The item actually sold out at that velocity so it probably had room to go from there as it sold out in 3 days.
GG run rate
So given what we know:
- Weekly pace
- $2m/wk run rate
GG is on a 52*$2=$100m run rate based on this first shot. What’s going to be interesting to watch is where does GG go from here? Obviously to get to my $1b, GG has to grow 10X. Here are some ideas:
- Wider distribution – I have no idea if this was sent to the whole 131m+ Groupon subscriber base or a subset. Based on anecdotal evidence, it was a subset. So this is one dimension they could grow on.
- More deals – The more deals you have, the more GMV. Will they expand from five a blast or increase/decrease?
- Deeper deals – The Altec ipod dock sold out, what if there had been 48k available, would they have hit $2m in that deal alone?
- Increased frequency – Right now it looks like this is rolling weekly. Obviously Groupon is in the daily deal biz, so I suspect they will crank the frequency of this up 6x over time to make it daily.
- ASP – On average the week 1 deals had an ASP of $56 and a range of $40-440 – there’s some interesting behaviours in deal of the day that eBay has seen around the $10-$50 price point where you can really pop volumes at those levels as you tap into discretionary dollars. It will be interesting to see if Groupon gravitates up/down/neutral on ASP.
Now that week two is out, we see some signs of what Groupon is experimenting with.
Groupon Goods – Week 2 – What does it tell us?
Here’s the week two set of deals:
A couple of interesting observations:
- There is one less deal (4 this week vs 5)
- The range is $9-$129 (lower than last week)
- Current ASP is $32
- One of the deals is already sold out – ice cubes sold out at 4600 units by the time I received the email!
Groupon Goods introduces Variations
One tricky concept in e-commerce is variations or parent/child relationships. You have a product that has different styles – e.g. colours, sizes, etc.
The little walking clock turns out to come in different colours and here’s how Groupon handles it (the guitar does as well)->
More than meets the eye
I did an informal survey around the office and of about 250 people:
- pretty much everyone subscribes to Groupon (ok we are a pretty e-commerce savvy group, but interesting non-the-less).
- Only about 50% of Grouponers got the GG deals
- Women received a slightly different set of deals:
So Groupon is actually doing a split/segmented mailing and in total there are MORE deals, just better targeted. More observations:
- Groupon clearly isn’t hitting the whole list, my guess is it’s about half and it seems to be the people that purchased most recently.
- They expanded, not contracted, the number of deals
- They are smarter at segmentation (and they know your gender!) than a lot of people give them credit for.
Stay tuned for the Week 2 results
That’s actually a lot of progress for a week, so we’ll keep a close watch on this to see how it goes as the offering is evolving rapidly. What do you think of the program so far? Sound off in comments.
SeekingAlpha Disclosure – I am long Amazon and Google. eBay is an investor in ChannelAdvisor where I am CEO. I did not buy the Groupon Goods HotPants (no really).