Groupon buys Ideeli for US $43M in cash and moves into fashion

What? Groupon has acquired flash fashion retailer Ideeli for US $43 million in cash.
Why it matters? This is both a product/customer and technology play, with Groupon running ideeli’s business and using its mobile expertise to expand into other flash sales categories.

Licensed: Creative Commons

Licensed: Creative Commons

Groupon has acquired ideeli, a flash fashion retailer, for US $43 million in cash in order to widen the net of consumers using its platform for more than daily deals. Ideeli’s acquisition underlines Groupon’s current yearning to expand into new product categories,after accomplishing its US$260 million acquisition of LivingSocial’s Ticket Monster business in Korea.

This acquisitions means an strategic gain for Groupon but a big loss for ideeli’s investors: the New York-based company had raised US$107 million in funding from investors like StarVest, Kodiak and Credit Suisse since being founded in 2007.

This is ideeli’s first major move into the fashion category by acquisition. It is both a product/customer and technology play, with Groupon running ideeli’s business and using its mobile expertise to expand into other flash sales categories.

“We are thrilled to add ideeli and their team to our company. Ideeli extends our fashion presence and brings great relationships with many of the top brands in apparel. Our customers have a demonstrated appetite for these offers, and by broadening our reach in this space Groupon is even better positioned as the place you start when you want to do or buy just about anything, anytime, anywhere,” said Groupon CEO Eric Lefkofsky .

The value of the off-price fashion market is estimated at around $40 billion annually (including both online and offline retailers). Ideeli has made US $115 million in revenue for the fiscal year ended February 2, 2013, and a US $30 million operating loss. The market so far is not so enthusiastic about the news with Groupon trading down by around 2 percent to $11.34.

Up to now, Groupon has not broken out sales of fashion items on its platform compared to other categories, but fashion discounts have been popular with Groupon customers. Ideeli will help it develop further inroads into the sector as a whole where Groupon needs to get stronger to go beyond the daily deal so as to build up its business.

“Groupon’s brand, reach and vision as an ecommerce destination make it a tremendous place to continue to grow our company,” said ideeli CEO Stefan Pepe. “We look forward to bringing the great deals we offer to Groupon customers,”He added.

Source: Techcrunch

 


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