Groupon's New 'Snap' App Gets You Cash Back on Groceries

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The company that set you up with that marked-down Thai restaurant meal last month and that half-priced spa treatment last week is now calling shotgun the next time you head to the grocery store. Groupon (GRPN) on Thursday introduced Snap, an app that provides cash rebates for buying promoted items.

Shoppers simply download the free app, check current offers and then go shopping. They can go to any retailer. All they have to do is submit a picture of the receipt -- hence the "Snap" -- to get the predetermined rebate. They can cash out once they accumulate $20 in savings.

Wall Street doesn't see Snap as a major disrupter. Coupons.com (COUP) and RetailMeNot (SALE) are two publicly traded companies that already specialize in Web-based bargains, and neither one opened sharply lower on Thursday's news. However, it would be unwise to underestimate Groupon.

Hitting the Express Lane

Groupon, the undisputed champ in daily deals, has achieved 92 million global app downloads over the years, making it easy to promote Snap as a new app for iOS and Android. It's not the only way that Groupon is making sure that Snap gets noticed:
  • The launch coincides with a contest that will award a free year's worth of groceries to a winning receipt submission through the Snap app.
  • Some introductory offers include $1 for any gallon of milk and $1 for any loaf of bread. Obviously these two brand-less rebates will be bankrolled by Groupon itself instead of the advertisers putting up brand-specific deals. It's found money for shoppers.
  • In a viral win, Groupon is letting users receive $1 cash back for every family member or friend that they refer to the app. If you see folks sharing the Snap app link through social media in the coming days, you'll know what they're up to.
Will this lead to counterfeit receipts being submitted? Will opportunistic deal chasers be hanging out at grocery store parking lots or rummaging through supermarket garbage cans to get their hands on receipts? Can friends double up on the same receipt if the safeguards aren't adequate?

Yes, there are plenty of ways for this to go wrong or to be abused, but Groupon knows what it's doing here. Besides, given the market's unhappiness with Groupon as an investment over the years, it's not as if the flash-sale giant has anything to lose by giving this a shot.

Marking Down Groupon Itself

Things haven't been rosy for investors who bought Groupon when it went public in November 2011 at $20. The stock has gone on to shed more than two-thirds of its value. Yes, Groupon shares did more than double last year, but it has given back most of those gains in 2014, with the stock surrendering 44 percent of its value this year.

Groupon hasn't lived up to the initial hype. It is starting to grow again, but not on both ends of the income statement. Revenue surged 23 percent in its latest quarter, but that's being fueled by the low-margin pursuits of international expansion and of sales of physical goods. Analysts see earnings per share actually declining this year despite the heady top-line growth.

It's too soon to weigh the impact that Snap could have on Groupon's performance. However, it will at the very least help drum up new marketing partners. That's a plus for a company that prides itself on its widening Rolodex of local merchants. With the stock shaping up to be one of the bigger Wall Street disappointments of 2014, bagging some grocery-store rebates could be one of the few bright spots for a company having a very rough year.

Motley Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends RetailMeNot. Try any of our Foolish newsletter services free for 30 days. To read about our favorite high-yielding dividend stocks for any investor, check out our free report.
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