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Groupon Reaching Past Local Roots

Attractive national deals offer easy one-day revenues
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At the same time Groupon was hiring a COO and raising a new funding round yesterday, the company known for keeping it local was testing yet another expansion into national brand marketing, along the lines of the popular local coupon deals it built its reputation on.

Groupon's deal with General Mills Thursday offered 5,000 packages of the food packager's products at a 50 percent discount. The Mills coupon was only offered in two cities: Minneapolis and San Francisco, matching dozens of regionally targeted deals for national brands that Groupon has done to date. In recent months, the company has executed similar offers with Southwest Airlines, American Apparel, WNBA, and Zipcar.

But Groupon is poised to go beyond the regionally limited deals. The company says its so-far small number of nationwide deals have been among its largest and most successful, according to Groupon spokesperson Julie Mossler. Last fall the company turned over $11 million in sales in a single day selling 400,000 coupons for The Gap. In November, a multiday half-off deal for Nordstrom Rack sold 625,000 coupons. As the company expands globally (it’s now in 500 cities and 44 countries), Groupon says the potential for more success with nationwide offers is clear.

Groupon doesn’t disclose breakdowns of national and local sales volume although Mossler said approximately 90 percent of the coupons it offers remain local. That ratio could change as Groupon positions itself in an increasingly crowded marketplace.

Mossler emphasized that Groupon isn’t abandoning its original mission of changing the face of local commerce. “It's possible to do both (national and local deals),” she said. “When national deals come in, they’re not taking the place of local ones.”

The company recently launched a home section on its site to promote its online-exclusive (and therefore, national) deals. That could negatively impact the hordes of secondary sites like DealHandler, ICouldUseaDeal, and GottaDeal, which scrape Groupon, LivingSocial, and other social shopping sites and republish their deals for an audiences of hardcore coupon clippers. It’s a surprisingly large shadow market, but Mossler says those sites miss some of Groupon’s best deals—the ones offered exclusively by email or through Groupon’s official affiliate network of bloggers.

The two-year old company faces a number of hurdles as it grapples with breakneck hypergrowth, including the aforementioned international expansion, an imminent IPO, and reportedly chaotic work culture. In a move yesterday to add experience to its top ranks, Groupon hired Margo Georgiadis, Google’s vice president of global sales planning and technology, as its new chief operating officer. Georgiadis will be particularly important in Groupon’s continued push into Asia.

A darling of the investment community, the company in December raised $950 million in venture backing from New Enterprise Associates, DST, Battery Ventures, and Accel Partners after rebuffing a $6 billion buyout offer from Google. (For its part, Google yesterday launched the beta version of its own competitor to Groupon, called Google Offers, in Portland.) Reports predict Groupon will go public in the second half of this year at a valuation estimated in the $15 billion-$20 billion range, raising up to $1 billion in fresh capital from public investors.

Last week the company also hired, by acquisition, Pelago CEO Jeff Holden. Pelago, which created the mobile location app Whrrl, will shut down on April 30. On Thursday Groupon filed a Form D indicating it raised $6 million in new equity in conjunction with the acquisition.