Groupon 2013 Annual Report Download - page 15

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customers in transactions for which we are the merchant of record. Our direct revenue from those transactions is the purchase
price paid by the customer, excluding applicable taxes and net of estimated refunds.
Our business model continues to evolve from primarily an email-based "push" model with a limited number of deals
offered at any given time to also include more extensive online "pull" marketplaces, particularly in North America, where customers
can come to Groupon and search for deals on goods and services. These marketplaces are accessible through our websites and
mobile applications, including through localized groupon.com sites in many countries.
On January 2, 2014, we acquired LivingSocial Korea, Inc. ("LS Korea"), a Korean corporation and holding company of
Ticket Monster Inc. ("Ticket Monster"), for total consideration of $100.0 million cash and 13,825,283 shares of Class A common
stock with an acquisition date fair value of $162.9 million. Ticket Monster, which has approximately 1,000 employees, is an e-
commerce company based in the Republic of Korea that connects merchants to consumers by offering goods and services at a
discount. The operations of Ticket Monster will be reported within our Rest of World segment beginning in 2014. For the nine
months ended September 30, 2013, LS Korea, excluding a Malaysian subsidiary that we did not acquire, had gross billings of
$572.7 million, revenue of $78.5 million and an operating loss of $38.7 million.
On January 13, 2014, we acquired Ideeli, Inc. ("Ideeli"), a fashion flash site based in the United States. Ideeli is focused
on women's fashion apparel, accessories and home décor, and the operations of Ideeli will be reported within our North America
segment beginning in 2014.
Categories
Local Deals. Our Local category includes deals with local merchants, deals with national merchants and local events.
We offer deals for local merchants across multiple subcategories, including food and drink, events and activities, beauty and spa,
health and fitness, home and garden and automotive. In the United States, customers can book reservations at selected restaurants
through our website and mobile applications. National merchants also have used our marketplaces as an alternative to traditional
marketing and brand advertising. Although our business today is weighted toward deals from local merchants, we are increasingly
using national deals to build our brand awareness, acquire new customers and generate additional revenue. In 2013, we featured
deals from a number of well-known national merchants across our North American markets, including Starbucks, Gap, Target,
Saks and Sam's Club. In addition to national deals, Freebies, our coupon offering that was launched in 2013, gives customers the
ability to access coupons from thousands of retailers. GrouponLive is a partnership with LiveNation whereby Groupon serves as
a local resource for LiveNation events and clients of its global ticketing business, Ticketmaster.
Groupon Goods. Our Goods category offers customers the ability to find deals on merchandise across multiple product
lines, including electronics, sporting goods, jewelry, toys, home and apparel. As the Goods category continues to grow, we expect
that we will continue to add new brands to our platform in order to expand our offerings.
In our Goods category, we earn direct revenue from transactions in which we sell products directly to customers and
serve as the merchant of record, as well as third party revenue from transactions in which we act as a third party marketing agent
and sell vouchers that can be redeemed for products with a merchant. Our Goods transactions in North America are primarily
direct revenue deals and, beginning in September 2013, a significant portion of our Goods transactions in EMEA were direct
revenue deals as well. Goods transactions in EMEA prior to September 2013 and in our Rest of World segment have primarily
been third party revenue deals.
In order to attempt to reduce costs and improve the customer experience, we are focused on streamlining our order
fulfillment process for Goods. For example, we entered into a lease for a fulfillment center in August 2013 and began processing
inventory through that facility on a limited basis during the fourth quarter. While we intend to open additional fulfillment centers
in future periods, a majority of our fulfillment operations continue to be outsourced through third party logistics providers at the
present time.
Groupon Getaways. Through our Getaways category, we feature travel offers, including hotels, airfare and package deals
covering both domestic and international travel. For many of our travel deals, the customer must contact the merchant directly to
make their travel reservation after purchasing the travel voucher from us. However, for some of our hotel deals, we take room
reservations directly through our websites. During 2013, we began featuring market-rate hotel offers within some of our local
commerce marketplaces that customers can reserve at regular room rates if they are unable to find a discounted hotel offer that
meets their travel needs.