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Can Eric Lefkofsky Turn Groupon Around?

The new CEO may be dealing with an impossible mission.

Photo: Rick Bowner/AP

On his first analyst call as CEO of Groupon in August, Eric Lefkofsky took the unusual step of saying that he plans to be CEO for only “a few years.” How does he aim to turn the company around so quickly?

Among the strategic spaghetti he has already thrown at the wall: travel deals (Groupon Getaways), curated products (Groupon Goods), and high-end specials (Groupon Reserve). Lefkofsky declined to comment for this story, but analysts note that he is moving the company from a push model (shoving deals through e-mail) to a pull model (drawing customers to the website through search engines). “Pull is immensely important,” says Deutsche Bank analyst Ross Sandler. “It demonstrates greater intent to convert [sales], allows for direct deal marketing, and opens the service to all users, not just subscribers.”

So far this shift has investors “more confident now than they were six months ago,” says Tom White, an analyst with Macquarie Research. “But the trajectory still isn’t smooth. The international market remains a question, and Goods seems to be a loss leader.”

That’s because Groupon Goods offers pricey perks like free shipping to lure customers away from Amazon and eBay. Gross profit on Groupon Goods fell 16 percent in the second quarter year over year. “We continue to spend too much on shipping and infrastructure,” Groupon CFO Jason Child said in August. Not on Lefkofsky, though—the CEO is making $1 a year (plus shares in the company stock, of course).

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