33% Of All Groupon Clones Have Been Shut Down Or Sold

One of the most common Groupon critiques is that the business is easily replicated. Yes, some might say, there are few barriers to entry. But there appear to be many barriers to success.

According to data from deals aggregator Yipit, 33 percent of daily deals sites have been shuttered or sold so far in 2011. That's 170 out of 530 deals sites overall. Growing operating costs appear to be an issue. 

Groupon spent about $7.99 to acquire each subscriber who actually redeemed a daily deal in the first quarter of 2010, according to regulatory filings. By the second quarter of 2011, that figure had nearly tripled to $23.46.

Overall, Groupon spent $378.7 million in marketing initiatives in the first half of 2011, up from $35.5 million in the same period a year earlier, according to regulatory filings. Many smaller websites don't have the war chest to compete, you might surmise.

At the same time, daily-deal sites also increasingly have to hire more salespeople to line up coupon offers from local merchants. Operating costs grow

Yes, there are few barriers to entry, but there appear to be significant barriers to success.

33% Of All Groupon Clones Have Been Shut Down Or Sold

Consumers Are Not Tired of Deals

A survey of nearly 1,000 U.S. online users by Utpal Dholakia, professor of management at Rice University finds that they are not yet tired of daily deals. Quite the opposite: Shoppers who tend to purchase the most daily deals continue to remain enthusiastic about them.

Only 13 percent of experienced and heavy daily-deal users agreed with the statement: "I buy daily deals less often than I used to," according to the study, published in conjunction with Cornell University. Only eight percent agreed with the statement: "I have lost interest in daily deals over time."

BAI/Kelsey, a local media and ad research firm, also has raised its forecast for daily deal revenue. U.S. consumer spending on deals, including daily deals, instant deals and flash sales, will grow to $4.2 billion in 2015 from $873 million in 2010. While the bump in its 2015 projection is only up slightly, the projection for 2011 revenue was revised to $2 billion, up 66% since the March estimate.

Think Consumers Are Tired of Deals?

"GrouponLive" to Sell Event Tickets

Groupon and Live Nation have a formed a joint venture to develop a new online ticketing deals channel called "GrouponLive."

GrouponLive will serve as a local resource for Live Nation events and clients of its global ticketing business, Ticketmaster.

The site is intended to help consumers to find high-value tickets to concerts, sports, theater, arts and other live events, while serving as a timely and effective way for merchants to sell more tickets.

The new effort will launch in time for the summer concert season, the companies say. One way to look at Groupon is that although it provides a promotional vehicle for retailers, it also is becoming a retail channel in the ticketing business.

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How Social Drives Shopping

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Social Shopping: What's the Big Deal?

OfferedApp Blends Social Shopping with Ad-Supported Apps

The idea of giving consumers something of value in exchange for the right to send or show advertising is not new. In fact, communication service or app providers have periodically experimented with the idea for years. The idea of offering free voice calls in exchange for listening to a few seconds worth of ads has been tried more than once, for example.

More recently, social shopping sites have plumbed a slightly different idea, aggregating groups of potential buyers before triggering an offer. A firm called "OfferedApp" works in both veins, offering users "free" apps that normally sell in app stores, in exchange for the right to show those consumers advertising. It's sort of like Groupon, but with the twist of offering free access to "paid" apps in return for the right to deliver advertising.

http://www.offeredapp.com/

Google Gets into Social Shopping

Google gets into the social shopping space with Groupon and LivingSocial.

Mobile Couponing Grew in 2010

Consumer use of mobile coupons has shifted radically from 2009 to 2010, say researchers at the Yankee Group. In 2009, just eight percent of respondents who expressed interest in mobile coupons using text messaging or multimedia message service had actually used a service such as Groupon.

Click on image for a larger view.

This figure more than doubled for 2010, to 19 percent of subscribers. Similarly, applications facilitating the real-time scanning of images or bar codes to receive more information or to compare prices increased in usage from five percent of consumers with an interest in mobile coupons in 2009 to 14 percent in 2010.

Yankee Group :: Research Report

Groupon Super Bowl Ad

Save the rainforest.....

SuperBowl Ad Strategy Still Works, Groupon Finds

Produce an ad you are fairly certain to be rejected. Get word of mouth about the rejected ad. Get views. Don't pay $2.5 million to $2.8 million. In this case, Groupon itself says it "rejected" the ad. It's the same concept.

How Groupon Might Change Advertising

"Maybe you haven’t noticed, but media companies have changed their strategy of charging for advertising," says Gordon Borrell, Borrell Associates president. 'If it continues, the business model for media might change forever.'

Group deals have allowed local businesses to offload the risk of advertising onto the media company, Borrell argues. "Advertising has become 'free,' and the media company gets paid only when a sale is made.

"If this continues, it will transform media companies into marketing partners," he argues.

Borrell Associates, Inc: Local Interactive & Online Advertising Research and Consulting

Google has "Groupon" Options, Says Mayer

How Userful is Groupon?

How useful is Groupon, for people who aren't so attuned to the game of "finding deals?"

Who Uses Deal-Of-The-Day Websites?

Who uses group buying or social buying sites?

You might think it is people for whom saving money is really important because they don't make as much. Actually, says Forrester Research, the three percent of U.S. consumers who frequently use deal-of-the-day sites have a lot of money to spend.

About half of them report having an average household income of $100K or more, and they expect to spend more money online this year than last year.

They are twice as likely to be influenced by what's hot and what's not, two-thirds are willing to try new things, and 62 percent agree that they often change their mind about which brand to buy after doing some research, making them the ideal target audience for deal-of-the-day sites.

But the Forrester Research data also shows that the majority of U.S. online consumers aren’t familiar with deal-of-the-day sites like Groupon or Living Social, and another 25 percent haven't used them yet.

The Data Digest: Who Uses Deal-Of-The-Day Websites?

Groupon Disappoints 40% of Retailers

A study of retailers using Groupon found 66 percent of the 150 merchants saying it was a profitable exercise, while 32 percent said their Groupon campaigns were unprofitable, the Wall Street Journal reports.

Forty percent of the respondents said they would not run such a promotion again, the study by Rice University’s  Jesse H. Jones Graduate School of Business found.

The point is that any mobile, web or transaction service can work well only when retail partners find the application or service profitable, easy to use and desired by end user customers. So far, Groupon might need to work on that a bit.

Social E-Commerce is More Marketing Than Commerce

It isn't clear yet whether social commerce sites such as Groupon.com, Buywithme.com, Lifebooker.com and livingsocial.com are a fad or a permanent trend in e-commerce. These sites offer discounts to groups of buyers that may or may not depend on how many people respond to a specific offer.

Typically, a group coupon site operates in multiple cities and features one merchant's discount per day per city in an e-mail to subscribers.

Merchants set a minimum number of customers who must sign up for an offer to work.

If the deal doesn't get enough interest in the allotted period, would-be buyers get their money back. But some 90 percent of Groupon deals do go through. So shoppers may feel they need to rush to sign up before the quota fills, which generates a marketing buzz for the stores and sites.

But the social commerce deals might be seen primarily as marketing campaigns, more than a way to move merchandise. The websites typically give retailers half the money they get selling the deals. That means there is little to no profit from a deal.

What the deals succeed in doing is creating an opportunity to attract new customes, though.

A half-off coupon, for instance, typically brings the retailer just one-fourth the price it usually charges for a given item and could end up costing the business money.