Groupon 2013 Annual Report Download - page 14

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Become the starting point for mobile commerce. We believe that Groupon is well positioned to be a leader in the world
of mobile commerce. During 2013, we continued to invest in our mobile technology in order to attempt to capitalize on the growing
trend of consumers making purchases through smartphones and tablets. In December 2013, nearly 50% of our global transactions
were completed on mobile devices, and nearly 70 million people have now downloaded our mobile applications worldwide. We
intend to continue making investments in mobile technology and marketing to help grow our mobile transaction volume and help
increase customer awareness of their ability to access our offerings on mobile devices.
Redefine local commerce. Groupon seeks to bring the power of the Internet to local commerce, serving as an important
source of subscriber acquisition for local merchants. To accomplish this, we are focused on growing our base of active customers
by offering a variety of quality deals and focusing on customer satisfaction. We believe that one of the primary causes of customer
dissatisfaction is when the promotional value of a voucher expires before the customer has been able to redeem it. Our efforts to
reduce expirations include building our online commerce marketplaces, where merchants generally have a continuous presence
for an extended period of time, and customers can wait until they are ready to use a voucher before making a purchase, rather than
making a purchase decision in response to a limited-time offer when they may not intend to use the voucher in the near term. We
are also in the process of developing functionality to improve the redemption process for customers.
Grow our local commerce marketplaces. We are in the process of transforming our business from a "push" model that
primarily generates demand by emailing offers to customers to more of a demand fulfillment, or "pull," model that enables customers
to search for goods and services through online local marketplaces that they can access through our websites and mobile applications.
By continuing to develop and expand these marketplaces, we are seeking to provide customers in each of our markets with a single
place where they can go to search for and discover great deals on offerings from local merchants, merchandise and travel. We
have increased our active deal counts from approximately 1,000 deals available worldwide at the time of our initial public offering
in the fourth quarter of 2011 to more than 140,000 deals available worldwide as of the end of the fourth quarter of 2013.
Enhance the email experience. While an increasing percentage of transactions on our platform are occurring on mobile
devices and our websites, email generates a significant proportion of our transaction volume, and we expect that it will continue
to do so in the future. We continue to refine our use of targeting technology that enables us to distribute deals to current and
potential customers based on their location and personal preferences. Our targeting technology is also used to inform our search
engine marketing and other transactional marketing spending that may attract potential customers who have not yet subscribed to
our emails, downloaded our mobile applications or purchased a Groupon. In addition to email, we also use this targeting technology
for push notifications on mobile devices.
Continue to build out our categories. Although Groupon began by offering only daily deals from local merchants, our
platform has evolved over time into three primary categories: Local, Goods and Travel. Within those primary deal categories are
a variety of subcategories, such as food and drink, events and activities, beauty and spa, home improvement, electronics and
apparel. We intend to continue to build out our categories and subcategories by actively pursuing opportunities that would enable
us to expand our deal offerings. See the "Categories" section below for additional information.
Globalize our platforms and processes. Because our international expansion was accomplished primarily through
acquisitions, we inherited different technology platforms and business processes. We have launched a company-wide program
that is aimed at streamlining our technology platforms and processes. We are also continuing to roll out a number of internal tools
aimed at increasing our efficiency, including, for example, internal tools used by our salespeople to support their efforts in obtaining
quality deal offerings for our marketplaces. In addition, we are increasingly automating our support functions in order to improve
the overall efficiency of our business operations.
Our Business
Groupon operates online local commerce marketplaces throughout the world that connect merchants to consumers by
offering goods and services at a discount. Traditionally, local merchants have tried to reach consumers and generate sales through
a variety of methods, including online advertising, paid telephone directories, direct mail, newspaper, radio, television and other
promotions. By bringing the brick and mortar world of local commerce onto the Internet, Groupon is helping local merchants to
attract customers and sell goods and services. We provide consumers with savings and help them discover what to do, eat, see,
buy and where to travel.
We earn revenue from deals where we act as a third party marketing agent by selling vouchers that can be redeemed for
goods or services with a merchant. Our third party revenue from those transactions is the purchase price paid by the customer for
the voucher less an agreed upon portion of the purchase price paid to the featured merchants, excluding applicable taxes and net
of estimated refunds for which the merchant's share is recoverable. We also earn revenue by selling merchandise directly to