Groupon buys ideeli for US$43m in cash deal

13 Jan 2014

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Online deals giant Groupon is continuing to expand into other areas online with the purchase of ideeli fashion retailers for US$43m.

The acquisition of the fashion retailer is one of the company’s growing attempts to distance itself with its somewhat unenthusiastic response from stores who felt the company’s voucher scheme which gave retailers increased business through vouchers at the expense of initial lower revenues with the expectations of continued business.

Companies later realised that the daily deals, for the most part, encouraged store-hopping as consumers would use daily deal vouchers from one location to the other and rarely returning.

Now however, the company has diversified and follows up on the purchase of Ticket Monster earlier in the month with ideeli.

Fashion ‘flash deals’

Based in New York and founded in 2006, the fashion retailer was the fastest growing company in the US in 2011 according to Inc. Similarly to Groupon, ideeli offers ‘flash deals’ that will expire from anywhere between a couple of days to a matter of hours.

In its announcement, Groupon CEO Eric Lefkofsky said: “"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."

Ideeli’s CEO Stefan Pepe also welcomed the acquisition: “Groupon’s brand, reach and vision as an ecommerce destination make it a tremendous place to continue to grow our company. We look forward to bringing the great deals we offer to Groupon customers."  

With ideeli struggling to make ends meet prior to the acquisition, it remains to be seen whether Groupon can make the company profitable again following its height in 2011.

Colm Gorey is a journalist with Siliconrepublic.com

editorial@siliconrepublic.com