New CEO Eric Lefkofsky has big ambitions for Groupon
Eric Lefkofsky says he intends to be the chief executive of Groupon Inc. for “a few years.”
His tenure will end, he said, when Groupon — which has fallen far short of once-lofty expectations by investors — has completed its transition from a daily deals company to an e-commerce company. His ambition, Lefkofsky said, is for Groupon to become the first place shoppers turn to when they “want to buy anything, anywhere, any time.”
Lefkofsky and fellow board member Ted Leonsis had been serving as interim co-CEOs of the Chicago company since founding Chief Executive Andrew Mason was fired in February. Lefkofsky headed the day-to-day operations while Leonsis led the search for a new CEO.
The search didn’t last long. Groupon announced Lefkofsky’s appointment as CEO and Leonsis’ appointment as chairman in conjunction with its second-quarter earnings release Wednesday.
The results showed progress on several strategic fronts that Lefkofsky had outlined as priorities, such as reducing reliance on email blasts and building a repository of offers that consumers can browse on their mobile devices and desktops.
The long-term vision of becoming an e-commerce giant includes offering high-end restaurant meals and household products and vacations, not just discounted spa and house-cleaning services.
“We realized the company was in a state where the very essence of the business model was still being built,” Lefkofsky said. “We were in the midst of this huge migration from being an email-oriented company to a primarily mobile company. We were still at a very entrepreneurial state, building out the very foundation of the business model.
“And so instead of starting a search and looking for a CEO, the board decided I’d be the right guy.”
Groupon said in its earnings call that it lost $7.6 million from April to June, compared with a profit of $28.4 million in the same period last year. Revenue was $608.7 million, a 7% increase from a year earlier.
The company’s revenue beat expectations of $606.1 million, according to Bloomberg News.
Investors seem to have been reassured by the better-than-expected quarterly results and CEO announcement. On Thursday, the stock rose $1.88, or 21.6%, to $10.60 — still well below the $20 initial public offering price when the shares debuted in November 2011.
Lefkofsky’s plans for Groupon are ambitious. He wants the company to dominate e-commerce, becoming the hub for every transaction between a consumer and merchant. The heart of this strategy is local commerce, but Groupon is also encroaching on Amazon.com’s territory with its Goods business, which sells a variety of products online. Lefkofsky envisions a local angle to Goods as well, explaining during a Wednesday conference call that the company plans to offer in-store pickup for this segment.
Mobile transactions are also crucial. Nearly 50% of Groupon’s North American sales were conducted on a mobile device in June, compared with 30% during the same month last year. Groupon is generating less business from its daily email blasts.
“We’re trying to convey this basic message, which is we want Groupon to be the place you start with when you want to buy anything, anywhere, any time,” Lefkofsky said. “We want you checking Groupon first. You might find a great deal on something you’re going to buy anyway.”
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