Market Overview

Look Out Costco: Groupon's Got Bulk Goods

Look Out Costco: Groupon's Got Bulk Goods
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Expanding its e-commerce portal to include bulk quantities of more than 100 items, Groupon (NASDAQ: GRPN) has taken on Costco (NASDAQ: COST) and Wal-Mart (NYSE: WMT) owned Sam’s Club, without the cost or bother of a membership.

The new service is called Groupon Basics.

According to Aaron Cooper, Groupon’s senior vice president of Goods, "We're putting the bulk buying power of Groupon to work for our customers, helping them save on serious quantities of the things they buy and use every day -- all from the convenience of their home."

"By adding this service to our marketplace, we're providing shoppers with great value and yet another reason to always check Groupon first. Best of all, there's no membership or monthly fees."

Related: Report: Amazon May Offer Physical Stores Kindle-Based Checkout This Year

The service kicked off with a number of household items like Dove deodorant, Pantene shampoo, Burt’s Bees hand cream, and Gillette razor heads, all in bulk and all at discount prices of about 20 to 30 percent off retail.

Groupon said delivery would be free for orders over $24.99, which is not a tall hurdle to overcome since the bulk nature of products would probably mean most orders would exceed that amount anyway.

As an incentive to get people to try the service, Groupon was also offering a five percent rebate in “Groupon Bucks.”

Groupon Basics launched in the U.S. only. Basics general manager, Rob Lopez told TechCrunch, “We have no plans to expand outside the US at the moment, but this is clearly an obvious next step assuming our customers request it.”

Adding Basics to the Goods service was a logical next step for Groupon. The Goods division brought in $1.87 billion in revenue in 2013 out of $2.6 billion in total revenue for the company.

Don’t look for Amazon (NASDAQ: AMZN)-like offerings of thousands of products in the Groupon Basics division. Just like warehouse clubs, bulk buying, to be profitable, can’t offer everything under the sun.

A Groupon representative told TechCrunch, “We’re not going for the tens of thousands of SKUs play here. We’re offering our customers a curated selection of inventory.”

The service could be seen, according to Venture Beat, as competition for Amazon Pantry. Amazon Pantry allows Amazon Prime members to order up to 45 pounds of “pantry essentials,” such as snacks, packaged foods, cleaning supplies, and more. The entire order garners a flat $6 delivery fee.

Meanwhile, Groupon Basics, the company said, was expected to expand its inventory of items and eventually include groceries.

At the time of this writing, Jim Probasco had no position in any mentioned securities.

Posted-In: Amazon Amazon Pantry Amazon Prime Costco GrouponNews Events Media Best of Benzinga

 

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