Groupon Doesn't Want To Be Amazon Or Wal-Mart (GRPN)

In the future, Groupon (NASDAQ: GRPN) could follow in the footsteps of another major corporation.

But it's not going to be Amazon (NASDAQ: AMZN) or Wal-Mart (NYSE: WMT). If Groupon begins to resemble any other firm, it will be Costco (NASDAQ: COST).

During an interview with AllThingsD, Eric Lefkofsky -- Groupon's new full-time CEO -- said that the company doesn't have enough SKUs to merchandise the site as much as he'd like. While he wants the merchandise selection to expand beyond the several hundred items that are currently listed, Lefkofsky does not want Groupon to grow into a big-box retailer.

"The way I envision it, it will be a highly curated selection of deals," he told AllThingsD. "It's not going to be a big-box retailer like an Amazon or Wal-Mart; it's going to feel much more like a Costco with a select number of SKUs."

Lefkofsky also said that the company continues to spend "too much on shipping and infrastructure," which drove Groupon Goods' gross margins "into the mid-teens."

"We expect that margins will improve over time as we scale these costs," he added. "But it is important to note that we could see variability quarter-to-quarter until then."

Related: Discussing Groupon's Future With Piper Jaffray's Gene Munster

That variability is one of the reasons why analysts have taken a more cautious approach to the stock. They are beginning to come around, however.

This week Jefferies raised its price target on Groupon from $6 to $8.50 and reiterated its Hold rating.

Bank of America upgraded the stock from Underperform to Neutral and raised its price target from $5 to $11.

These firms were inspired to change the price targets after Groupon released its second quarter results, which created a massive market move.

Groupon soared to nearly 17 percent during after hours trading on Wednesday, August 7. The stock soared even higher on Thursday but tapered off before the market closed.

As of this writing, Groupon shares have experienced a slight increase after rising less than one percent on Friday.

While the second quarter results provided a reason for traders to invest in Groupon, some analysts were intrigued by the company's potential weeks before its earnings were released.

When Wunderlich Securities initiated coverage of the stock early last month, it applied a Buy rating and said that the opportunities outweighed the risks.

With new services like Groupon Reserve, the company hopes to expand on those opportunities while providing its customers with new options.

Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.

Louis Bedigian is the Senior Tech Analyst and Features Writer of Benzinga. You can reach him at 248-636-1322 or louis(at)benzingapro(dot)com. Follow him @LouisBedigianBZ