Groupon 2013 Annual Report Download - page 57

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49
Cost of revenue by category and segment for the years ended December 31, 2013 and 2012 was as follows (in thousands):
North America EMEA Rest of World Consolidated
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
Year Ended
December 31,
2013 2012 2013 2012 2013 2012 2013 2012
Local (1):
Third party ........................ $ 82,636 $ 123,871 $ 45,718 $ 47,812 $ 28,446 $ 48,124 $ 156,800 $ 219,807
Direct................................. 2,554 10,128 ————2,554 10,128
Total cost of revenue...... 85,190 133,999 45,718 47,812 28,446 48,124 159,354 229,935
Goods:
Third party ........................ 2,090 11,981 16,760 18,066 29,645 21,475 48,495 51,522
Direct................................. 707,270 355,051 102,687 38,914 27,549 13,384 837,506 407,349
Total cost of revenue...... 709,360 367,032 119,447 56,980 57,194 34,859 886,001 458,871
Travel and other:
Third party and other ........ 13,971 9,360 7,624 7,776 5,172 9,274 26,767 26,410
Direct................................. — — — 3,724 — — — 3,724
Total cost of revenue...... 13,971 9,360 7,624 11,500 5,172 9,274 26,767 30,134
Total cost of revenue............ $ 808,521 $ 510,391 $ 172,789 $ 116,292 $ 90,812 $ 92,257 $ 1,072,122 $ 718,940
(1) Includes cost of revenue from deals with local merchants, from deals with national merchants, and through local events.
North America
North America segment cost of revenue increased by $298.1 million to $808.5 million for the year ended December 31,
2013, as compared to $510.4 million for the year ended December 31, 2012. The increase in cost of revenue was primarily driven
by the cost of inventory and shipping and fulfillment costs related to direct revenue deals in our Goods category, due to the growth
of that category as compared to the prior year.
EMEA
EMEA segment cost of revenue increased by $56.5 million to $172.8 million for the year ended December 31, 2013, as
compared to $116.3 million for the year ended December 31, 2012. The increase in cost of revenue was primarily driven by the
cost of inventory and shipping and fulfillment costs related to direct revenue deals in our Goods category, as we began increasing
the number of product deals offered in our EMEA segment for which we are the merchant of record beginning in September 2013.
Rest of World
Rest of World segment cost of revenue decreased by $1.4 million to $90.8 million for the year ended December 31, 2013,
as compared to $92.3 million for the year ended December 31, 2012. The decrease in cost of revenue was primarily driven by
reduced email distribution costs, primarily due to the migration to an internal email distribution platform, lower payroll expense
for editorial personnel and a reduction in estimated refunds for which the merchant's share is not recoverable, partially offset by
increases in the cost of inventory and shipping and fulfillment costs related to direct revenue deals in our Goods category. We
expect that cost of revenue for our Rest of World segment will increase in future periods as a result of our acquisition of Ticket
Monster.