What Groupon Plans to Do With Ideeli, Which It Just Acquired

We spoke to Groupon and Ideeli about what the acquisition means for both companies.
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Dhani Mau
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We spoke to Groupon and Ideeli about what the acquisition means for both companies.
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Getty

Another flash sales site -- once the "It" e-commerce business model -- has been acquired, and not at a very good price, for its investors at least. Ideeli, one of the first and seemingly strongest of those business has been purchased for a modest $43 million in cash by Groupon, both companies announced Monday.

The news comes about less than a year after the appointment of Ideeli's new CEO, Stefan Pepe, and has raised eyebrows for a couple of reasons. For one, $43 million seems like a small amount for a company the size of Ideeli, which was founded in 2007 and has since raised over $107 million. (By comparison, Nordstrom bought HauteLook, a similar site, for $270 million -- and even that amount seemed low.) Secondly, what does it mean for all of the investors who have put millions into the company, only to see it sold?

We spoke briefly with Stefan Pepe, CEO of Ideeli and Lisa Kennedy, head of Groupon Goods North America, and while they declined to discuss how they reached the "magic number" of $43 million, Pepe stressed that Ideeli will still function as its own separate website and mobile app and that we'd have to ask the investors how they feel about it.

They had more to say about why this deal made sense and what we can expect from both entities going forward. Pepe explained that Ideeli has a lot to gain by being a part of Groupon and that the deal will help Ideeli reach its potential: For instance, expanding internationally. (Ideeli currently only sells to North America). Likewise, Groupon spokesperson Paul Taaffe said that the company's customers "love apparel," and that they have responded well to a prior partnership between the two -- where Groupon hosted a sale offering $80 worth of Ideeli merchandise for $40.

And though Groupon remains a separate website, with Pepe continuing on as Ideeli's CEO, we will see some changes in Groupon's offerings. "We are going to be looking for opportunities to build out fashion and apparel within the Groupon Goods section," explained Kennedy, adding that Ideeli's existing relationships with brands will "govern how that happens."

It will be interesting to see what Groupon's foray into fashion will look like, and also how Ideeli will fare with its plans for expansion amid questions about the viability of the flash sales model.

For now, they're offering shoppers 20% off orders in celebration of the news.