Mobile Commerce Daily is now Retail Dive: Mobile Commerce! Click here to learn more!

Groupon’s acquisition of OrderUp suggests uptick in mobile food ordering

Groupon is acquiring on-demand mobile ordering and delivery platform OrderUp as local commerce marketplaces compete to grab a slice of revenue from food enthusiasts’ smartphones and wallets.

Groupon is aiming to bump up its presence in the $70 billion food ordering and delivery industry, particularly as it spills over to mobile devices. While the online marketplace currently offers many local deals for restaurants and eateries, the acquisition speaks to Groupon’s desire to enable more instant gratification and impulse purchases to consumers.

“Getting into this business represents an untapped opportunity for us and serves as natural extension of our marketplace,” said Nicholas Halliwell, manager of public relations at Groupon, Chicago. “Food and drink is one of our most popular categories, and we already have relationships with tens of thousands of restaurants around the country.

“Plus, takeout and delivery is one of the obvious use cases for local commerce, and no one does local better than Groupon.”

Untapped opportunity
Groupon believes the online and mobile food ordering sector represents an untapped opportunity for the brand, which seeks to market to customers nationwide with promotions pertaining to as many industries as possible. Its daily deals span activities such as spa days and weekend getaways to services including hairstyling and car detailing.

The marketplace hopes OrderUp’s operational ability will gel well with Groupon’s significant merchant and consumer base, which may bring massive scale to the food ordering space.

“Delivery on-demand makes much more sense with food than it does with clothes or shoes – although my wife would argue that point,” said Jeff Hasen, founder of Gotta Mobilize, Seattle. “Like most things in mobile, we won’t get to 100 percent interest in a service like this but we all need to eat.

“The restaurant business is among the most-upended in the mobile era.”

Mr. Hasen is not affiliated with Groupon or OrderUp, but agreed to comment as an expert.

OrderUp has seen more than 10 million orders processed since its inception. Coupled with thousands of its restaurant partnerships, Groupon will likely maintain an advantage over its competitors in the daily promotions sector, such as LivingSocial.

Groupon currently has an active membership base of approximately 25 million customers in North America.

Therefore, its integration with OrderUp may spark a seed of worry among smaller mobile ordering applications with less consumer leverage, and may even pose a credible threat to power players such as Seamless and GrubHub.

OrderUp primarily caters to metropolitan areas such as Denver and Baltimore, as well as regions with large student populations, including the college towns of Boulder and State College in Colorado and Pennsylvania, respectively.

The ordering and delivery platform will continue its operations as a standalone brand with cross-promotion of inventory items via Groupon’s merchant pages and marketplace.

Challenging competitors
Mobile delivery is increasingly becoming a challenging space to navigate, due to the large amount of major brands and food chains rolling out ordering platforms within their branded or third-party affiliated apps.

In February, GrubHub’s acquisition of two mobile-optimized delivery sites, DiningIn and Restaurant on the Run, pointed to the company’s growing focus on ramping up mobile ordering as leading brands such as Taco Bell and Starbucks continue to roll out similar offerings (see story).

Chipotle Mexican Grill has also rolled out mobile-enabled delivery services for users of the Postmates app, following on the heels of Starbucks’ similar move, even as the latter also tests a branded solution, raising the question of whether consumers will prefer third-party or restaurants’ own mobile delivery offerings (see story).

However, Groupon’s massive customer and merchant connections are well-poised to give the marketplace a leg up as it enters the sector.

“Mobile customers tend to be more engaged than our Web-only customers, purchasing more frequently and spending more,” Groupon’s Mr. Halliwell said. “Delivery services have a very high frequency use case, giving us the potential to make Groupon an even bigger part of our customers’ daily routine.”

Final Take
Alex Samuely is an editorial assistant on Mobile Commerce Daily, New York