Groupon, a part of its expansion plan has acquired online flash sales fashion retailer ideeli to expand in the apparel sector. Groupon announced on Monday that they have paid paid $43 million in cash for ideeli and closed the deal successful.
Ideeli will maintain its headquarters in New York and will continue to operate as a separate website. Ideeli started in 2007 and was part of a group of so-called flash sales companies that specialized in fast, daily online events that offered heavily discounted fashion apparel in limited supply.
Groupon CEO Eric Lefkofsky said that Ideeli extends their fashion presence and brings great relationships with many of the top brands in apparel. Their customers have a demonstrated appetite for these offers, and by broadening their 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.
The sector grew fast after the 2008 financial crisis because there was lots of unsold inventory of well-known brands. But as the economy recovered, inventory fell and it became more difficult to offer such deals at volume. That left some flash sales companies like ideeli struggling or changing their business models.
Fashion is one of the top categories for e-commerce and it should keep growing. But flash sales have lost their momentum so it will be interesting to see if Groupon will keep that format, said Sameet Sinha, an analyst at B. Riley & Co.
The deal gives Groupon relationships and expertise in the fashion sector and ideeli’s customer acquisition costs may fall if the company’s sales events are marketed to Groupon’s existing customers.
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