Groupon cuts over 500 staff as the downturn takes its tolll

Chicago-based Groupon today laid off more than 500 of its employees, according to posts from former employees on social media. It affected workers in teams including merchant development, sales, recruitment, engineering, product, and marketing as well as public relations.

TechCrunch reached out to Groupon for comment but did not yet hear back at time of publication.

The coupon-finding platform has grown to have steep e-commerce competition since its founding in 2011. Rakuten and Honey, which sit on consumer’s browsers to scour the internet to show related deals, have grown into massive companies. All the platforms make money from affiliate fees and revenue-share partnerships, meaning the more competitors, the bigger the fight for customer acquisition.

Over the past few years, the number of Groupon shoppers has fallen sharply. According to Statista, 22.2 million visitors to the company’s site purchased at least one offer in Q1 2022, down from nearly 54 million in Q4 2014.

Add in the fact that e-commerce tailwinds have changed as consumer spending changes in reaction to the market downturn, and it’s a hard time to be a growth-stage startup.

The layoffs, while substantial, aren’t as large as cuts Groupon made to its workforce in 2020. In April of that year, Groupon said it would lay off or furlough 2,800 employees as business “deteriorated” from the COVID-19 pandemic. Following the restructuring, Groupon phased down its goods category as it shifted toward a third-party marketplace model, which had merchants assume responsibility for fulfillment and returns.

According to its jobs page, Groupon has openings for 67 roles in teams across account management, engineering, software development and more. The company is trading at $13.89 at time of publication, down 67% from its 52-week high of 41.66.

It’s likely no coincidence that the layoffs arrived ahead of the release of Groupon’s Q2 2022 financial results this afternoon. The company’s 2021 revenue was $1.0 billion, down 32% compared with $1.4 billion in 2020.

Food Delivery Product Managers Need Steady Customers

The chase is on for customers who will order repeatedly
The chase is on for customers who will order repeatedly
Image Credit: Eric Vondy

I can only speak for myself, but it seems as though anytime I walk into a store that sells food, there is some sort of sticker on the door that proclaims that if I’d prefer to have my food brought to me, there is a service that will do it. What a fantastic age we now live in! The product managers at these food delivery services are working hard to try to establish their new market while fending off all of the other companies that are doing the same thing that they are. However, there is a fundamental problem that they are all dealing with: their customers are not turning into repeat customers.

The Problem With Food Delivery Customers

If every store that serves food now offers a form of delivery, what’s the problem that product managers have to solve? The problem is that food delivery services have not yet figured out how they can change their product development definition in order to create repeat customers. What these services are discovering is that a customer’s decision to order food often depends considerably on which delivery services are currently offering a discount. The problem is that discounts are doing a good job of attracting customers and encouraging them to order food more frequently. However, the discounts are causing customers to hop from one food delivery service to another as customers look for the most generous coupons.

Product managers are discovering that their younger customers, the ones who use their food delivery service the most, are the ones who lack loyalty. The food delivery product managers know what they need. They need high-frequency customers who order from them repeatedly. They need these customers to be driven by their force of habit more so than by the availability of coupons. In the food delivery market the various food delivery services are all currently trying to build up the largest user base before they take the time to find ways to make each individual order profitable.

Right now the food delivery market is a tough market for product managers to be competing in. In a recent survey, only 6% of the respondents said that they ordered restaurant delivery daily. 36% of the people said that they order once a month or less. This is in contrast to how people order from grocery stores to have their food delivered. It turns out that only 4% of people order their groceries online. All of this is not going to look good on anyone’s product manager resume.

How Food Delivery Product Managers Are Going To Make Their Customers More Reliable

The food delivery product managers have an example that they are hoping to not follow. The meal-kit business, where subscription boxes of pre-apportioned ingredients along with recipes were delivered to customers, went through a boom bust cycle. They had used free trials and promotions to initially get customers, but once those stopped their customers dropped by half and a number of start-ups went out of business.

The good news is that people think that the food delivery firms have a better chance of staying in business because takeout food does not require the same level of work on the customer’s end as a meal kit does. The challenge that is facing product managers is to keep the customers that they already have because if they wander away, they can be very expensive to win back. This is why food delivery product managers are starting to experiment with a new idea: subscriptions.

The idea behind food delivery service subscriptions is that satisfied customers will sign up for regular services at a flat rate. The thinking is that this would allow them to avoid delivery charges. Over at Amazon, they have already started doing this by allowing their Prime members to get free grocery deliveries from Whole Foods. The DoorDash product managers have decided to wave the cost of a delivery on orders that are greater than US$15 if the customer has signed up for the service each week. The challenge for product managers is that there are limits to subscription programs. The biggest issue is that delivery fees are negotiated individually with each restaurant.

What All Of This Means For You

As product managers we always want to be involved in exciting markets that are growing rapidly. It turns out that the food delivery market is one such market. There are a lot of different issues identified in the product manager job description that these product managers are currently dealing with including a lot of competition. However, there is one significant issue that may cause significant problems as this market matures. This issue is that the customers that they have today are buying food because they have discount coupons and they may not turn into repeat customers.

Customers are currently being presented with multiple discount offers from different food delivery companies. This is doing a good job of attracting new customers and getting them to use the service. However, the customers are switching food delivery companies based on what discounts they can get. The customers who use food delivery services the most, the younger customers, are the ones who most lack loyalty. Studies have shown that not many people are currently using the food delivery services. What the food delivery product managers don’t want to do is to emulate what happened to the meal-kit product managers who saw their market go away once they stopped offering discounts. A new idea that food delivery product managers are looking into is subscriptions: food is delivered for free if you are a subscriber. There are challenges to this type of program that product managers will have to work out.

Based on the number of food delivery service stickers that we are starting to see on doors when we go out to eat, this is a booming market. Food delivery product managers are dealing with all of the issues that any startup business have to deal with, but they also have to deal with the fundamental problem of not having enough repeat customers. What has to happen is that ordering takeout food from restaurants is going to have to become second nature to customers who like the food but who don’t want to visit the restaurant. Changing the way that customers view the world can be difficult to do, but if food delivery product managers can pull it off then they just might have a winner on their hands!

– Dr. Jim Anderson Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: If food delivery product managers stop offering discounts, what else can they offer to get people to use their service?

Click here to get automatic updates when The Accidental Product Manager Blog is updated.
P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

If you were looking for an exciting product manager job, then being a product manager at the European aircraft company Airbus would probably be a safe bet. Airbus is always locked in battle with the U.S. firm Boeing and both companies sell hundreds of their large airplanes to airlines around the world. At the start of this century Airbus introduced their biggest bet on the future so far, the A380, and now it looks like their product managers were wrong about a number of things and that’s making everyone look bad.

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Grocery Store Product Managers Get Ready For The Future

Grocery stores are going to have to change to keep up with customer's needs
Grocery stores are going to have to change to keep up with customer’s needsImage Credit: I-5 Design & Manufacture

Product managers for grocery stores have actually had it pretty easy for quite some time. If you think about it, your local grocery store probably has not changed all that much since you were a little kid. Oh sure, now they have organic vegetables and perhaps they create prepared meals, but their product development definition has not really changed all that much. It turns out that big changes are getting ready to come. With the arrival of “shop from home services”, grocery stores are going to have to change in order to stay in business. It sure seems like their product managers are going to have to start to get innovative.

Grocery Stores Are Facing New Challenges

In the world of grocery stores, competition used to come from the grocery store that was located down the road. As long as you had competitive prices and a good stock of foods, you were going to do ok. As the grocery market has globalized, new competitors have shown up and all of sudden competition has started to reach a fever pitch. One of the most significant new arrivals in the grocery business has been the online retailer Amazon. Amazon is offering very competitive prices coupled with quick home delivery. Amazon is also very good at using the data that they collect about their grocery customers to target more customers based on both their shopping and buying behaviors.

Grocery stores in the past never really had to work that hard to get people to visit their stores. Everyone needed to eat so everyone needed to shop for food generally at least once a week. However, with an increasing number of options, it has become a challenge to get customers to visit the grocery store. In a survey of grocery store customers, it turns out that only 47% of these customers said that they shopped for their grocery products in a single grocery store. A decade ago this number was 61%. This means that grocery stores are going to have to determine what their customers really want. In order to do this, they are going to have to get good at mining all of that customer data that they have been collecting.

The people who study the grocery store business believe that with the arrival of Amazon and other online grocery stores, existing grocery stores are going to have to start to work harder to make both the discounts that they are offering and their stores attractive to their customers. As an example of the challenges that they will be facing, each year Amazon spends roughly 12% of their sales on technology. Traditional grocery stores spend more like 3% of their sales on technology. Going forward, grocery stores are going to have to change their thinking and start to view themselves as being more like technology companies.

It’s Time For Product Managers To Show Some Innovation

Clearly grocery store product manager have some real challenges coming their way. The good news is that they are aware of this and they are already starting to take action in order to strengthen their product manager resume. In order to be successful in the future, product managers believe that customer data is going to be their new battleground. These product managers are going to have to be both smarter and faster if they want to have any hope of competing in this highly competitive market. Technology is going to have to be used. One example of this is the use of sensors to detect how many people are in a grocery store. When the number reaches a certain point, additional cashiers are then placed in service. This can help to reduce customer wait time by minutes.

Product managers are continuing to look for ways that they can incorporate more technology into their grocery stores. Sensors can be installed that allow the store to monitor the freshness of certain types of produces. Additionally, if any of the coolers in a store experiences a failure, the store manager can be immediately notified so that they can take action before any food spoils. The next step in all of this new technology has to do with the shelves where the actual products are displayed. New technology that is set to roll out soon will allow store shelves to recognize and communicate with apps on the phones of shoppers who are close to a given shelf. The app on the phone will know about the customer’s shopping habits and using this information, the store shelf will display a customized banner ad that is targeted at this particular customer. Information could tell the customer that the item was gluten-free or nondairy.

A good example of product managers who have risen to the challenge that is posed by the new grocery store market is over at Kroger. They realize that mining customer data holds the key to maintaining customer market share. They were one of the first grocery stores to start to use a customer loyalty program. They did this so that they could collect more data on their customers and then use that data to keep a close eye on their customer’s needs. Kroger sends coupons to over 12 million customers. In order to make these coupons as effective as possible, the Kroger product managers use over 850 algorithms to determine which customers should get which coupons. Using the purchase data that they have collected, Kroger can tell a lot about their customers: if they have started a diet, had children, or retired. Using this information, different products can be marketed to different customers. Going forward, the Kroger product managers want to discover how to use technology to enhance the customer’s store experience.

What All Of This Means For You

As product managers, being responsible for a grocery store used to be a fairly safe job. Simply put, grocery stores had not changed that much in many years. However, these days that has all changed. In part due to the fact that Amazon has entered into the grocery business, now grocery store product managers find themselves under a great deal of pressure to take a look at their product manager job description and figure out how to become innovative in order to survive.

The reason that the arrival of Amazon has caused such changes in the grocery business is because Amazon is offering both low prices and home delivery. Customers no longer just shop at one grocery store like they used to. Unlike just 10 years ago, they are now shopping at multiple grocery stores. With the arrival of Amazon, traditional grocery stores are now going to have to work harder to get customers interested in their discounts and visiting their stores. Grocery store product managers view technology as being the key to their long term success. New technology that tracks the number of customers in the store and monitors the freshness of produce are being installed. The next wave of technology will make shelves smart enough to talk with apps that customers have on their phones and start to display messages that are targeted to specific customers when they approach. Kroger is one grocery store that has realized that they need to change. Their product managers are using customer data to target specific customers with specific offers.

The grocery store business is competitive now and will only become more competitive over time. Product managers are going to have to find ways to keep the customers that they have and attract new ones. Technology will play a key role in how they go about doing this. If the product managers can truly discover what their customers want, then they will have found the secret to their grocery store’s long term success.

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: If you were a grocery store product manager, how would you get more people to come to your grocery store?

Click here to get automatic updates when
The Accidental Product Manager Blog is updated.

P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

When was the last time that you went out to a mall? For most of us, it’s probably been a while. We used to always go to the mall – that’s where you could get stuff, especially during the holidays. However, with the arrival of online shopping most of us don’t go to malls as much anymore. This has created a problem for mall product managers. Creating and filling a mall with stores used to be a straightforward job for product managers: get a few big stores, get some smaller but still well known stores, and ta-da you had a mall. However, with today’s changing retail situation, mall product managers are having to change their product development definition and how they do their job.

The post Grocery Store Product Managers Get Ready For The Future appeared first on The Accidental Product Manager.

RetailMeNot sues rival Honey over patent infringement

RetailMeNot is suing rival Honey over patent infringement, the company announced this week. Honey is the maker of a deal-finding browser extension that helps consumers shopping online get the best price by automatically applying coupon codes at checkout. It also helps with finding the best price on Amazon purchases, doles out digital coupons, offers cash back, helps you track price drops, and more.

According to RetailMeNot’s suit, Honey infringes on U.S. Patent 9,626,688; 9,639,853; 9,953,335; and 9,965,769, which detail technologies related to things like facilitating access to promotional offers, merchant offers, and coupon codes.

“These valuable patents protect RetailMeNot’s pioneering developments in computer-related technologies, and Honey’s unauthorized use of them enables key features of Honey’s website and browser extensions,” RetailMeNot stated in a press release about the lawsuit, which is how Honey first heard the news.

The suit comes at a time when Honey is growing in popularity among online shoppers, while RetailMeNot is getting a bit long in the tooth. The latter has been around since 2006, while L.A.-based Honey was founded in 2012, and is backed by over $40 million in funding, according to Crunchbase. It had a reported 5 million monthly active users as of last fall, and said users were saving an average of $32 per month with its help.

Honey has also dabbled with expanding its deal-finding efforts to other verticals, including as of last year, travel.

Meanwhile, RetailMeNot, a subsidiary of Harland Clarke Holdings, claims $4.8 billion in retailer sales were attributable to consumer transactions from paid digital offers in its marketplace last year, with over $560 million which were attributable to its in-store solution. (The company operates a number of websites, including in the U.S. and .ca in Canada, plus in the United Kingdom; and in France; and and in North America.)

Reached for comment, Honey called the lawsuit “baseless.”

“We were disappointed to learn of this lawsuit from a press release and are in the process of reviewing the documents with our legal counsel,” said Honey spokesperson, Kelly Parisi, VP, Communications. “The lawsuit is baseless and the claims are irrelevant to how consumers use and experience our services. It’s unfortunate that they’ve taken this tactic to try to thwart innovation that helps consumers save time and money when shopping online.”