Groupon will no longer sell any physical items as the discount ecommerce marketplace shifts its focus solely onto experiences.
Rich Williams, the Chicago-based company’s chief executive, announced earlier this week that Groupon will “exit goods” and no longer sell clothing, toys or any other physical goods.
The news has sent Groupon’s share price divebombing whopping 42 per cent to $1.70.
Groupon’s marketplace connects with local retailers, restaurants and an array of experiential businesses like spas and cinemas to offer significant discounts.
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Though it currently offers a wide array of discounted physical goods from leading brands, Groupon says that it was not well positioned to succeed in a saturated retail market, and it will axe its physical retail operations by the end of the year.
“We believe our plan to exit goods will allow us to dedicate the focus and resources necessary to build a winning position as the purchase of experiences continues to migrate online,” Williams said.
Its chief financial officer Melissa Thomas added: “At scale we can unlock the potential of our financial model and become the largest two-sided marketplace that connects merchants to loyal, engaged customers who are looking for unique local experiences around the world.”
This comes after a woeful 23 per cent drop in revenues over its last quarter to $612 million (£475 million), well short of analyst predictions of $709 million (£550 million).
It attributed this poor performance to a 32 per cent dive in its physical goods business.