Deal Fatigue: Is Groupon Losing its Appeal?

By: EW News Desk Team   Date: 16 April 2011

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EW News Desk Team

Always on the look out for the latest news to monitor the state of the world economy.

EconomyWatch, News Desk Team

 

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16 April 2011

How many deals have you bought from Groupon and other rival sites such as LivingSocial, BuyWith-Me, Rue La La and Urban Daddy? Honestly. The fact is, while Groupon’s rival sites are on the rise, Groupon is actually, on its way down. The company’s revenues tanked 30 percent in February from January – and 32 percent last month (according to Yipit).

 Bet they’re regretting turning their nose up at Google’s US$6 billion buy offer now – or does Groupon have new tricks up its sleeve? Groupon’s Super Bowl commercials were shown the very same month their revenues plunged (and the ads battered by critics):

So what is it about Groupon that’s losing its appeal among its deal junkie consumers? After all, everyone loves a bargain.

The deals seem to make enough sense; $20 instead of $40 for shopping vouchers, $35 instead of $75 for a massage and $15 instead of $30 for a meal – plus discounted holidays and everything else in between. Deals that make sense and genuinely help people to save money on things they normally do anyway.

I think we’ve all realized, and especially after the recession, that spending to save – is a hoot in the long term. Flash sales that encourage impulse buying, are a distinct money no-no. And when the “I’ve won a deal!” excitement wears off, buyer’s remorse can really set it in.

Deals, Deals, Deals... and More Deals
[Source: OnlineMBA.com]

What about the advertisers? Do they really get repeat business from deal seekers or extra spend? Rice University conducted a study and found 42 percent of coupon users didn’t spend more that the value of the deal or came back again. Okay, so there’s still good promotional value in coupons for businesses but is it a sustainable way to market a business?

Groupon does however have one advantage over its competitors: they did get there first (which is everything in market power). But what can – or will they do to make Groupon tick again?

More ads perhaps?

Clever or insensitive? Tell us what you think about Groupon’s ad campaign below.

 


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