Groupon fails to make the daily deal

Groupon was a high flyer, now it's fighting a rough future as consumers tire of daily deals.

Groupon’s stock hit a new low after a disappointing earnings report last week. The stock has lost more than 80 percent of its value since it went public just a year ago. Meanwhile Amazon recently posted a loss on its investment in the deal site LivingSocial.

So is the daily deal dead? A little tired, maybe.

“Consumers have run into daily deal fatigue,” says analyst Carl Howe with the Yankee Group. He says the business was great when one discount at, say, a local spa or restaurant landed in your inbox every day. “Now it’s not unusual for consumers to have four or five or six, and after a while it just gets to be too much,” Howe says.

Merchants, too, have cooled off on deal sites after losing money on steep discounts or failing to attract repeat customers. But Greg Sterling with Opus Research says saving money never gets old, “I think consumers continue to be interested in deals and offers and discounts,” he says. “What we have now is a kind of massive correction.”

To stay alive, Sterling says Groupon and LivingSocial are moving beyond daily deals. Both now sell products like electronics and jewelry at a discount and offer marketing services to small businesses.

About the author

Amy Scott is Marketplace’s education correspondent covering the K-12 and higher education beats, as well as general business and economic stories.

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