Groupon (GRPN -4.58%) plans to return to its roots as a website that sells local deals. This decision was reached after the company has posted several disappointing quarters including its most recent one -- where revenue dropped by 23%.

The app/website had been selling a mix of experiences and physical goods at deep discounts. Selling goods required warehousing, shipping, and other expenses while selling experiences can all be done digitally.

A person holds a smartphone.

Groupon has struggled to stay relevant. Image source: Getty Images.

What is Groupon doing?

The company plans to refocus on what it first became known for -- local deals. CEO Rich Williams explained the plan in a letter to shareholders.

Our strategy is simple: turn Groupon into THE local experiences marketplace. This means planning a quick exit from the Goods category, dedicating our resources to expanding our local experiences marketplace and executing a new course of action.

Basically, Good has been a low-margin business that takes eyeballs away from the company's core mission. Williams noted that the category got 40% of site impressions while only delivering 20% of gross profits.

Will the audience still come?

Williams assumes that dropping Goods will lead to customers seeing experiences or local deals and buying more of those. That's potentially a risk because the category may have driven some people to Groupon and when the goods disappear, those consumers may take their discretionary income elsewhere.

Selling hard merchandise -- even highly discounted and distressed items bought for pennies on the dollar -- comes with more risk and expense than selling a digitally delivered product. Groupon may lose audience doing this (or it may not) but it's definitely taking a safer path toward being a profitable, albeit probably smaller, company.