Group Commerce to Merge With Nimble Commerce | Street Fight

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Group Commerce to Merge With Nimble Commerce

4 Comments 02 May 2013 by

nimblegroupThree months after laying off a quarter of its staff, Group Commerce has agreed to merge with its primary competitor, Nimble Commerce, in an all-stock deal, continuing the consolidation among white-label deal companies. Under the terms of the deal, Nimble Commerce CEO Prashant Nedungadi will lead the new firm, which will retain the Nimble Commerce name, and Group Commerce CEO Jonty Kelt will stay on as an adviser and step back from day-to-operations at the company. Financial terms of the deal were not disclosed.

Both companies bet on a similar model, effectively building an advertising network for deals that connected large local publishers with companies like Sweet Jack and Travelzoo that source deals. In a sign of trouble, Tippr, one of the other early competitors in the space, was sold for parts last week to Atlanta-based nCrowd.

The deal effectively puts an end to Group Commerce less than a year after the New York-based startup raised $17 million from a handful of notable investors. The company, which built e-commerce (e.g. deals) platforms for publishers, shut down its local offers business in January after it could not support the cost of retaining a local sales force.

Kelt told Street Fight that the company’s investors, which include Foursquare and Signpost backer Spark Capital, will become shareholders in the new company, but declined to comment on the extent to which the deal would dilute their shares.

The deal, which will push Nimble Commerce into profitability, was mostly focused on scaling the company’s network, says Nedungadi, who will manage the transition from the company’s Santa Clara headquarters over the next few months. The new company will build around Nimble Commerce’s existing technology stack, essentially folding in Group Commerce’s publishers agreements and, for the most part, scraping its product.

Group Commerce, which cut its staff from 109 to 78 in January, could potentially take the brunt of the layoffs, given the nature of the deal. Both executives say that decisions about cuts have not been made yet, but that the company does plan to reduce “redundancies” over the next few months. Nedungadi says that the largest layoffs will likely come in areas like product development where scale does not require additional personnel.

The daily deals market, of course, has taken a hit over the past 12-18 months, but until recently much of the consolidation occurred among the consumer-facing companies. The merger marks a turning point for a model, as local media companies continue to grasp for alternative revenue streams. E-commerce is likely to play a part, but its unclear whether the rapid adoption by local publishers of marketing services businesses will affect the position of offers platforms in the market.

Steven Jacobs is Street Fight’s deputy editor.

  • http://twitter.com/DarrellEllens DarrellEllens

    I think this is a good merger for both companies. They can now focus on developing their platform and other services. Their white label deal platform is great, too many companies are focussing on building their own platform, which in most cases will be not as good as the one Nimble Commerce can provide them with. Today’s Daily Deal companies must also make use of Inbound Marketing with a focus on mobile and hyper-local.

    Congratulations to both parties on a successful merger.

  • Ex- GC Employee

    “Both executives say that decisions about cuts have not been made yet….” – What bunch of crap. They already laid off all but 3 employees that worked at GC. I’m pretty sure decisions have already been made… Who at Street Fight is in Mr. Kelt’s back pocket? And it wasn’t a “Merge” NimbleCommerce Bought GC’s Customers, they are throwing out their code and fired all of their employees. It was for the Client List and nothing else. Seems like Jonty Kelt is leaving a lot of the facts out.

  • Albert S. Bitton

    Both companies have been strong supporters of the Canadian Deals Association. As such, we have worked with both. A merger was necessary at this stage in order to offer the market far more product depth. The one issue I have with many ecommerce local platforms such as these is their cost to publishers. They may very well be affordable for large publishers but smaller and mid sized publishers cannot sustain the pricing model. I therefore believe that some kind of lite version is required in order to expand the client potential for Nimble. If not, then the market will demand companies like Bigcommerce or Shopify to add such functionality at a much reduced rate. For now, this merger does not impact Canada all that much. Nimble has large clients in Canada (Tuango) and will now also pick up Rogers from Group Commerce. All our best to Nimble, Prashant and Kevin are a great team. Looking forward to seeing how they will expand further.

  • Tom O’Brien

    I interviewed at GC 2 or 3 years ago when the group deals space was very frothy. While I didn’t get the job, it was a good thing. The GC team seemed more motivated to find a quick exit rather than building a sustainable business. As such, most of the senior team had experience with previous exits. And they were supremely arrogant about their ability to get a quick exit. While, I understand this is a valid business strategy, I think it makes for a terrible day 2 day working culture–one fraught with contradictions– building long term relationships that need time to develop, vs selling snake oil. I’m surprised they lasted as long as they did. What comes around goes around.

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