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Why Groupon May Hold Leverage Over Amazon - Research Report On Groupon, Inc. And Amazon.com Inc.

Stocks in this article: AMZN GRPN

NEW YORK, January 23, 2013 /PRNewswire/ --

Groupon, Inc. (NASDAQ: GRPN) [ Full Research Report] [ 1 ] added fuel to the fire after it bought CommerceInterface, a provider of e-commerce management solutions to companies including Amazon.com Inc. (NASDAQ: AMZN) [ Free Research Report] [ 2 ]. The deal is partly an effort on Groupon's part to advance in the competition and to closely bid against Amazon's online retail and coupon business.

CommerceInterface is vital to web-based companies by enabling its merchants to optimize the aggregation of goods from multiple vendors on an e-commerce platform. By purchasing CommerceInterface, Groupon is set to become the sole beneficiary of the channel management technology that Amazon heavily relies on. Amazon and other companies that are benefiting from the sales process management technology are given until the first half of this year to transfer to another provider.

Groupon's acquisition sums up their plan of expansion. The company has a good chance at improving its business and becoming safe for investment, but there remain several challenges ahead. Amazon, with its tremendous pipeline, has the potential to become the heavyweight competitor Groupon fears. However, despite Amazon's relatively young online coupon business after purchasing LivingSocial, there seems to be no vindication for Groupon.

Groupon's Strategy and Opportunity

One of the reasons why Groupon purchased CommerceInterface could probably be its market strategy. With the help of CommerceInterface, Groupon can reach international segments. Thus, it gives them the opportunity to increase revenues and expand to new markets. This may be good news for investors, but the company's competitive advantage does not seem to be making an impression on analysts and investors. There have been a lot of sentiments surrounding Groupon, one of which is to oust its beleaguered chief.

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