Food delivery services industry
Like Amazon (AMZN), Groupon (GRPN) is another player that recently forayed into the food delivery services market. In August 2015, Groupon launched a new program called Groupon to Go. The service will launch in Chicago, offering food-delivery deals that allow customers to save up to 10% on every order.
In addition to introducing this program, Groupon acquired OrderUp, a Baltimore-based delivery service startup that operates in multiple cities. Groupon’s main objective is to leverage the $70 billion delivery industry by expanding its service in various US cities.
According to the above graph and a report from Zacks Investment Research, with the exception of 4Q14, Groupon’s adjusted earnings per share have declined in the last two quarters of fiscal 2015.
Since its launch in 2008, Groupon has seen immense growth in its visibility in multiple cities and its user base. In 2011, Forbes listed Groupon as the fastest-growing company. The same year, Groupon filed for a $750 million IPO after turning down a $6 billion offer from Google (GOOG) to acquire it. However, after its 2011 IPO, Groupon began to report losses each quarter, resulting in a 42% fall in its share price.
Groupon has faced tremendous competition from e-commerce giants such as eBay (EBAY) and Amazon (AMZN), which are becoming the first choice of merchants due to the lucrative services being offered. For example, eBay Deals has been a highly successful service, offering benefits to customers such as convenient ordering, free shipping, and low prices.
For diversified exposure to eBay, investors can consider the SPDR S&P 500 ETF (SPY), which invests in the 500 largest companies in the US. The technology sector accounts for 18% of the fund’s portfolio.