Groupon Unveils Self-Service Tool to Draw Merchants to Deal Site

Groupon Inc. unveiled a self-service feature that could let thousands of additional merchants work with the online deals provider every month, said Dan Roarty, the company’s vice president of product development.

Known as Deal Builder, the tool will offer templates and step-by-step directions so merchants can create product and service offers without help, Roarty said in an interview. Previously, Groupon’s sales force worked with sellers -- usually in person or via phone -- to create offers.

The feature could attract smaller vendors and sellers in more categories, such as photographers, Roarty said. At the end of the third quarter, Chicago-based Groupon averaged more than 65,000 active deals in North America, and more than 500,000 merchants have been featured in its online marketplace.

“Before, we ended up with a lot of merchants that’d call in, and we wouldn’t necessarily have someone available right then and there,” Roarty said. “What we’ve launched now is a way for merchants who want to take action very quickly to do self service. It’s really designed to increase the number of merchants, in a lot of locations where perhaps we wouldn’t deploy our outbound sales force.”

Groupon has already tested the tool with about 10,000 vendors in the last several months and found that “a very strong percentage of them are able to successfully get through the process,” he said. Deal Builder will initially be available to U.S. merchants only.

Customer Loyalty

The service could help Groupon increase the loyalty of merchants, and free up its sales force to go after more new sellers, Peter Krasilovsky, an analyst at market researcher BIA/Kelsey, said in an interview.

“I am quite impressed by the way they are moving on a number of fronts,” he said.

Groupon has been adding features as it works to revive the business after it lost more than 80 percent of its value in its first year after going public in November 2011. Groupon is now transforming itself into a service that offers thousands of discount promotions at once, available any time via the Web or smartphones, from a once-a-day e-mailed daily deal.

To expand the business, Groupon last month agreed to acquire fashion site Ideeli for $43 million in cash. It also expanded its management team.

The company will be reporting its fourth-quarter results on Feb. 20. Analysts surveyed by Bloomberg expect adjusted earnings per share of 2 cents on $718.2 million in sales. That’s an improvement from a year earlier, when Groupon posted a loss of 5 cents a share on revenue of $638.3 million. Groupon’s third-quarter revenue trailed analysts’ estimates.

“They are significantly improving their value proposition to the merchant, as they are adding new services,” Tom Forte, an analyst at Telsey Advisory Group, said in an interview. “They are building toward a future where they’ll be the marketing partner of choice for these small businesses. They’ll go to Groupon for daily deals.”

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