Photo: Asa Mathat | All Things Digital
eBay has had a fantastic run lately, as CEO John Donahoe has pulled off the unlikely feat of turning around an Internet giant. Its stock is up about 50 per cent this year.Groupon, meanwhile, has seen its stock crater by two-thirds.
So here’s a modest proposal: Having turned around eBay, Donahoe should buy Groupon and turn it around, too.
There’s plenty of pessimism about Groupon’s long-term viability. But there’s also untapped value in the relationships Groupon has formed with hundreds of thousands of local businesses around the world.
Going beyond daily deals, Groupon is aiming to serve those businesses with loyalty programs, customer reservations, and point-of-sale software—possibly even payments, the specialty of eBay’s PayPal business unit.
While you wouldn’t think of eBay and Groupon as having much overlap, in a lot of those small-business services, eBay is going to be bumping heads with Groupon more and more.
There’s also Groupon Goods, a nascent e-commerce business which could in theory compete with eBay’s old-school auction marketplace for liquidating out-of-season merchandise.
And don’t forget that eBay’s archenemy, Amazon.com, has invested in LivingSocial, the No. 2 player in the market.
When Groupon was a private company, its board could make gutsy moves like turning down Google’s $6 billion offer. Now that Groupon is publicly traded, it would have a much harder time refusing an attractive offer from eBay.
And eBay—thanks to Wall Street’s newfound bullishness on its shares—has room to make a big bid, and bet that Groupon, despite all its obvious problems, has built a small-business franchise that will be hard to reproduce.
It’s the same kind of bet eBay made when it bought PayPal a decade ago. And that’s paying off, big-time.