Marketing

Sick of Getting Groupon E-mails? Well, It's Sick of Sending Them


Gmail is succeeding in its efforts to help its users avoid marketing e-mails they don’t want to open. The company may be doing this not only by banishing them to an obscure folder, but also by discouraging companies from relying on sending them in the first place.

Groupon (GRPN), which rode a wave of spammy e-mails to an initial public offering, reported earnings on Thursday. The company’s chief executive, Eric Lefkofsky, said that it saw “low double-digit declines” in the percentage of people who opened its e-mails, compared with the quarter before. He reiterated that the company needed to get away from relying on e-mail for the bulk of its business. As the company announced Thursday that it had acquired Ticket Monster, a Korean deal site, Lefkofsky boasted that e-mail accounted for only 10 percent of its Ticket Monster sales.

Groupon’s revelation is not a surprise. Gmail’s attempts to filter out useless messages has caused no shortage of angst among e-commerce companies. Zulilly, another flash sales site, mentioned Gmail’s settings as a potential threat to its entire business model when it filed to go public. E-commerce companies have been sending customers e-mails with instructions about how to keep their messages from getting lost in the promotion folder. But there is also some evidence that the worry has outpaced the reality for some companies. In the past two weeks, executives from both Expedia (EXPE) and Shutterfly (SFLY) told investors they haven’t been affected by the changes.

For Groupon, the Gmail changes are only the latest sign that the salad days of sending out e-mails and raking in dough are not coming back. In recent months the company has pointed out the shrinking percentage of its sales that come from e-mail. Lefkofsky said it is now “under 40 percent.” That’s a lot less than several years ago, when practically all of Groupon’s business came from e-mail. But it is also about the same proportion as last quarter.

Groupon recently relaunched its website and mobile apps. Lefkofsky told investors during an earnings call that the company is “building the infrastructure to behave like a real e-commerce company, where you can look at your traffic, and look at your searches, and say, hey, I need to have inventory in this category.” But getting people to go from noticing an e-mail to visiting Groupon’s website isn’t necessarily going to be easy.

Groupon thinks it has an ace up its sleeve, though. “We have an inherent advantage that many other companies don’t have, and that is when we want to market a new product, we get to send basically two e-mails a day to our entire customer base, which is over 200 million subscribers,” Lefkofsky said during the call. It just has to hope that those messages don’t wither away in the dusty e-mail tabs of its former customers.

Brustein is a writer for Businessweek.com in New York.

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Companies Mentioned

  • GRPN
    (Groupon Inc)
    • $6.5 USD
    • -0.07
    • -1.15%
  • EXPE
    (Expedia Inc)
    • $79.31 USD
    • -0.86
    • -1.08%
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