Groupon to build warehouses in master plan to cut out go-betweens
By Jay Keller
Groupon CEO Eric Lefkofsky described efforts to build a network of warehouses across North America during an interview with the Wall Street Journal on Tuesday.
Lefkofsky said that the Chicago-based Groupon, Inc., has already set in motion plans for one site in Kentucky and hopes to open more warehouses over time.
What the move entails is an expansion of Groupon Goods in an effort to provide customers with a solution to help them buy “anything, anywhere and any time.”
Goods Deals feature daily what Groupon calls really great deals on select products that in order to get airspace on Groupon Goods they have to to “be cool enough to share and innovative enough to inspire”
Currently, the supply chain is sustained with Groupon partnering with merchants to supply products sold as Goods Deals with supplies spanning many categories including fashion, electronics, arts & entertainment, grocery, health & beauty, home & garden, kids toys and sports & outdoor gear.
Lefkofsky described during the interview trying to improve cost margins with their current supply model by “bringing shipping in house” while speculating that Groupon would need at least three warehouses to reduce shipping times.
Another unidentified Groupon spokesperson, however, clarified the statement made by Lefkofsky to the Wall Street Journal by adding “we [Groupon, Inc.] don’t have a specific number of warehouses planned or in mind.”
No timeline for expanding warehouse operations was given this week but Groupon has been heading in this direction since at least March 2013.
Groupon CEO Eric Lefkofsky described a new outlook for the company during an exclusive interview with FastCompany’s Elizabeth Spiers last March, the first time the chief executive had spoken publicly since taking over sole control from co-founder Andrew Mason.
Regardless, industry insiders and news outlets are quick to point out that such an evolution by Groupon would pit the daily-deal service against heavyweight Amazon.com, a company who continues to outpace online competitors like Overstock.com and mega retailer Walmart.
The impetus, says Lefkofsky, is to help satisfy the customer and their ever-growing desire for free and fast delivery.
Groupon currently offers free shipping and returns on purchases $14.99 or more but news outlets and industry insiders have speculated that this could be another area Groupon could beat out rivals, especially through cost-cutting measures that reduce costs along supply chain, beginning with the warehouse plan.