Weekly Update

Mobile is Groupon’s future, and the future is now

Shares of Groupon plunged to a record low this week as the subscriber growth slowed more than expected, leading some analysts to question whether the daily deal business may already be plateauing. That may be true, but mobile promises to bring an enormous amount of value to that industry as we increasingly use our phones to shop, find discounts and even make purchases. Groupon has a lot of work to do if it’s going to become a leader in the world of on-the-go social coupons, however.

Mobile email fail

I’m reminded of that every time I try to open a Groupon email on my phone.  The emails are invariably unreadable on my mobile — which runs Android 2.3, the most popular version of the dominant OS — displaying only a partial header and text box asking me to click through to see the entire message. After clicking through, the phone takes a minute or two to load the message only to present a sliver of the email; I have to scroll both vertically and horizontally to decipher it as if I were reading a newspaper with a magnifying glass. And the experience isn’t a lot better on an iPhone, which also requires users to click through to access the entire message.

The obvious problem is that Groupon tries to cram its PC-centric email format – replete with big, splashy images and multiple offers — down to the smaller screen, where it’s difficult or impossible to fully access. That’s especially frustrating because email is Groupon’s bread and butter; it’s the medium upon which its business was built. Contrast that strategy to Living Social, which often strips images entirely in mobile email, focusing instead on the text and links. (It’s also worth noting that Living Social is Groupon’s biggest competitor in the daily deals market.)

Marketing its mobile app

Meanwhile, Groupon has made great strides with its mobile app, which aggregates discounts from multiple categories: In addition to the daily deals, it offers Groupon Now discounts (based on user location and time of day), Getaways and Groupon Goods, which sells discounted products rather than coupons to be redeemed later. The app presents a wide variety of offers but is still easy to use, and members can access their coupons and rewards or update their profiles with just a few clicks. And users can opt to receive a mobile barcode, enabling them to browse, buy and redeem all from the handset.

The problem, though, is that uptake of the mobile app may have stalled. Nielsen released data last week indicates Groupon is the third most-popular smartphone shopping app in the U.S. with nearly 12 million unique active users, second only to eBay (13.2 million users) and Amazon (12.1 million). But while eBay’s mobile app audience grew 31 percent in the first half of 2012, and Amazon’s rose 12.1 percent, Groupon’s unique users grew by only 10 percent, ClickZ reported.

A crucial time in a cutthroat market

Groupon is fending off a host of competitors in the cutthroat market to deliver a mobile wallet, and Citi analyst Mark Mahaney accurately wrote this week that there are plenty of uncertainties as the company builds out a platform for local mobile e-commerce. But there are a few things that Groupon should be doing immediately to boost its standing in the space: It must make sure its emails to subscribers are usable on a wide variety of mobile devices, and it must find innovative ways to inform consumers about its mobile app and convince them to download it. (This recent deal to integrate its offerings with Nokia Maps on the Finnish manufacturer’s handsets is a great example of how to do that; Groupon should also do a better job of informing its PC-based subscribers about its mobile app.) Groupon still has the user base and the cachet to become a force in the race to provide consumers with a mobile wallet. But if it doesn’t move quickly – and wisely – it will be trampled by an army of competitors.

Question of the week

Will Groupon emerge as a winner in the race for the mobile wallet?