Eric Lefkofsky, Groupon CEO, Defends Move Into eCommerce
Eric Lefkofsky, Groupon (NASDAQ: GRPN) co-founder and CEO, appeared on CNBC's Squawk on the Street Friday to defend his company's transition into the mobile eCommerce space versus giants of that realm like Amazon seeming impossible to compete with.
“Guidance for the first quarter's actually fairly strong in terms of revenue. I think we guided a $710 million to $760 million, which is pretty aggressive. It's 22 percent at the midpoint,” said *
“And we're fortunate to be able to guide to growth, you know, 2013 was all about building a solid foundation; and 2014 is about growth. To get some of that growth we have to invest in marketing, and so we told the market that, ah, we're going to be investing about $45 million in marketing to drive that growth; but the growth is pretty dramatic. And we also told the world that our 2014 EBITA would be slightly at or above 2013 levels. So to have a company our size growing in the mid 20s that's still delivering, you know, $300 million of EBITA is pretty strong and we actually view it as a sign of strength that we're able to make that investment.”
He said that as far as consumers go, demand has never been higher, with 56 million groupons sold in Q1, a record quarter in billings and revenue, the latter of which he claimed was up 20 percent. He attributed any unmet expectations to the transition his company is facing as it moves from daily email deals to a mostly mobile platform. Lefkofsky said that investing in marketing during the period is “prudent” to do in the longterm when considering how important awareness is.
“Our mobile adoption worldwide is 50 percent, which is staggering for a company our size. We had 9 million app downloads last quarter. We're at 70 million downloads to date,” said Lefkofsky.
According to Lefkofsky, Groupon isn't trying to compete with Amazon or Priceline, companies that curate certain deals, but rather just dominate the local commerce space.
“They're trying to be Amazon right now. They have double the shipping costs of all of their eCommerce peers. The margins are killing them right now. The margins have gone down so dramatically as they've transitioned from a third-party marketplace business to now an eCommerce business,” said BuzzFeed President and COO Jon Steinberg while discussing Groupon's place against heavy competition later on Squawk on the Street.
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