Groupon Inc., the daily deals site that’s already expanding in fashion and South Korea, is now selling razors, vitamins and other consumer goods in bulk in an effort to grab more of the e-commerce market.
Its new service, called Basics, lets consumers stock up on more than 100 household, personal care, health and wellness, and grocery items. Initially available in the continental U.S., Basics offers free shipping on orders of $24.99 or more and doesn’t require a subscription, according to a statement today.
Groupon, which bought South Korean e-commerce marketplace Ticket Monster Inc. and agreed to acquire fashion site Ideeli earlier this year, is expanding into a full-blown e-commerce site, going up against the likes of Amazon.com Inc. While Groupon is a minnow compared with the Seattle giant, the U.S. warehouse club market, valued at $148 billion and growing at about 7 percent annually, is attracting competitors large and small.
“We really see this as another way to become the place where you can buy pretty much anything,” Rob Lopez, general manager for Groupon Basics, said in an interview. While there are lots of brick and mortar bulk stores, they are “super inconvenient because these warehouses typically aren’t down the street from you.”
Groupon Basics will form part of the company’s online product business, Groupon Goods, which posted revenue of $1.87 billion last year, a 25 percent gain on 2012.
The company has been testing the new service, which is targeted toward small businesses and individual consumers, since March, Lopez said. Groupon negotiates for the goods directly with vendors and distributors and stores the products in its warehouse in Hebron, Kentucky, opened last year.
Basics is available online and via Groupon’s mobile application. As an introductory promotion, customers who place an order will receive 5 percent back in Groupon Bucks, an on-site credit that can be used for a future Groupon purchase.
Under Chief Executive Officer Eric Lefkofsky, Groupon has been making acquisitions and investing in marketing initiatives as it moves beyond the online-discounts business. In February, the company forecast first-quarter profit that trailed analysts’ estimates as rising costs eat into earnings. Groupon, based in Chicago, reports results on May 6.
Groupon rose 1.3 percent to $7.08 at the close in New York. The shares had dropped 41 percent this year through yesterday, compared with Amazon’s decline of 24 percent.