U.S. Markets closed

Google to Shutter Zavers

Zacks Equity Research

Per a Re/Code report Google Inc. (GOOGL) will shut down its online coupon offering, Zavers. Zavers’ customer page states that a number of grocery stores chains including A&P, Waldbaums, Raleys and The Food Emporium utilized the service. Limited growth of the business for a prolonged period is apparently the reason behind Google’s decision to close the service.

Google had launched the digital coupon offering in a bid to reap maximum benefits from its search engine business and expand its online shopping business.

Zavers, launched in January last year, is a digital coupon solution that allows vendors and producers to reward shoppers with relevant coupons, expand reward programs and track redemption of the coupons. Customers could save the Zavers discounts, which they found on retailer websites, to their accounts.

Coupons were redeemed and savings deducted automatically upon scanning of the loyalty cards or entry of phone numbers at checkout. Zavers is Google’s first product based on its 2011 acquisition of a startup Zave Networks.

Reportedly, some vendors were reluctant to share information regarding their important customers with Google, which made Zavers less effective, ultimately leading to the decision to close the service, which will happen over the course of the next few months.

Coupons often induce consumers to buy items that they initially may not have intended to, increasing the number of users and hence expanding the revenue base for the seller. Coupon marketing is gaining popularity and the Internet is fueling this growth. Consumers gain from this form of marketing as coupons enable them to buy premium goods and services at lower prices. It is also ideal for small enterprises to market and promote their businesses. In the U.S., Groupon Inc. (GRPN) and LivingSocial.com are the dominant players in the segment.

Had the service been successful, Google’s platform would have helped retailers to update their data and promote their businesses by better targeting coupons. This, in turn, would have improved their return on investment (ROI.V).

Moreover, this service had the potential to strengthen Google’s foothold in the retail world and could have helped it to expand services like Google Wallet in the long run. Customers using Google Wallet could redeem the Zavers coupons instantly by using their phones at the checkout point.

However, the closure of this limited-potential service seems to be in sync with Google’s efforts to strengthen its foothold in other, more lucrative markets such as wearables, robotics and autonomous driving.

LivePerson Inc. (LPSN) and Rovi Corp. (ROVI) are two technology stocks with a Zacks Rank #1 (Strong Buy), and therefore worth considering.

Read the Full Research Report on GRPN
Read the Full Research Report on ROVI
Read the Full Research Report on GOOGL
Read the Full Research Report on LPSN

Zacks Investment Research