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Groupon Now is more like Groupon not yet.
The daily deals company is off to a slow start with its instant discount service, which delivers offers through its mobile app to users based on their location, according to a new report.
Groupon Now launched in the second quarter to much fanfare from the company, with one exec saying it could contribute 50 percent of revenue within two years.
But five months later, Now has yet to move the needle. The service has generated less than $1 million in net revenue, representing less than 0.5 percent of Groupon’s North American revenue, according to a report from Yipit, which tracks deals data.
Groupon, which began its IPO roadshow yesterday, is promoting Now as “Groupon 2.0” in its pitch to potential investors and it has touted the mobile service as its most innovative feature yet.
At the time of its launch, CEO Andrew Mason sent an internal memo to employees saying Now was among the innovations that would contribute another $1 billion in revenue by year’s end, according to a Bloomberg Businessweek story from March.
Groupon’s growth has been slowing and analysts have said it needs to show new areas of success to justify a high valuation.
Last week, the company set an initial share price range of $16 to $18 that would give it a market cap of $11.5 billion. Still, that lofty valuation is about half the $25 billion to $30 billion it originally sought.
Sucharita Mulpuru, an analyst with Forrester Research, said Groupon Now is in beta in a limited number of cities, about 25 markets. However “you’d only be [compelled] to use it if there was a good quantity of offers available for you at any given point in time.”
But that takes time to build, and people who may have even had an inclination to try it lost interest.”
Yipit said the problem is that Groupon customers are used to being “pushed” into deals with passive e-mails, not “pulled” by actively searching the app.
Separately, yesterday, Groupon sued two former salesman who joined Google Offers, a rival daily deals service, claiming they took company secrets with them.