Daily Deals Market Going Bust

Farhad Manjoo looks at the dismal earnings by Groupon and offers a harsh truth:

On Monday, it reported its second-quarter earnings results. The numbers were dismal. They paint an unmistakable picture of the future of Groupon and other similar sites: The daily deals industry is drying up. Groupon reported that its customer growth slowed substantially over the second quarter; the amount of money that each customer spends on the site tanked; and the company’s “guidance” for the current quarter suggests that things are going to get a lot worse. The spin from Groupon’s executives was not very encouraging. In a conference call with analysts, the firm’s CEO Andrew Mason kept talking up Groupon Goods, a service in which Groupon sells discounted merchandise to customers—in other words, something completely different from the coupons that earned the firm its IPO.

The fact that even Groupon is no longer banking on Groupons is fantastic news for everyone, especially all of us who are sick of morning email deal spam. But the biggest beneficiaries of Groupon’s problems are the world’s small-business owners, people who will no longer be taken in by its terrible deals. Today, Groupon’s stock is down nearly 30 percent. Its demise may not be imminent, but it seems assured. Let’s all rejoice.

One of the most satisfying things I’ve done in a looong time was unsubscribe from every Internet coupon service like Groupon and Living Social. I’d rather join a mailing list for local businesses, find out from them if they have a sale or something cool going on and support them that way. My problem with Groupon, specifically, is taking a gamble on something and realizing the small business Groupon was selling me sucked.

Classic case of over-promising and then having that company under-deliver. Once that happens too many times, you’ll want to unsubscribe real fast. Further, I never understood how you could build a sustainable business selling coupons.

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