The problem with Groupon and other local deal companies is that they have to manage fluctuations on both the consumer as well as the merchant side. Even if one side of the equation wobbles a little, Groupon will feel the impact. I think at this stage, Groupon is fighting a dual (losing) battle:
1) Merchants perception of the whole daily deal market is very negative. Repeat business is quite low and it mainly attracts the spendthrifts who are looking for a deal. Given the margins that most local businesses have, running a daily deal means taking a hit on those margins.
2) From a consumer perspective, the novelty of the daily deals market has really worn off. Consumer fatigue has set in and more and more people are tired of having their inboxes flooded with emails. Personalization is still a joke and ticks people off even further.
It wont be long before the whole local deal market implodes (think of it -- the 2nd largest player - LivingSocial is not yet profitable). Groupon is well aware of this and so is trying to ramp up its technology platform via acquisitions to eventually evolve into something more. Its just a matter of time that the whole thing comes crashing down.
The local deals is analogous to department store clearance sales. Retailers have perfected the art of the sale and they know that clearance sales are a different animal. If someone comes into you store and heads straight to clearance they can't be upsold. Don't waste your time on them.
This is different from your event sale, which are an excellent way to gain repeated customers (and upsell them). There is a future for local deal sites but it needs a different hook with customers.
1) Merchants perception of the whole daily deal market is very negative. Repeat business is quite low and it mainly attracts the spendthrifts who are looking for a deal. Given the margins that most local businesses have, running a daily deal means taking a hit on those margins.
2) From a consumer perspective, the novelty of the daily deals market has really worn off. Consumer fatigue has set in and more and more people are tired of having their inboxes flooded with emails. Personalization is still a joke and ticks people off even further.
It wont be long before the whole local deal market implodes (think of it -- the 2nd largest player - LivingSocial is not yet profitable). Groupon is well aware of this and so is trying to ramp up its technology platform via acquisitions to eventually evolve into something more. Its just a matter of time that the whole thing comes crashing down.