I was surprised to hear this week that voucher giant Groupon’s US revenue is in decline. Almost everyone I know receives the daily deals to their inboxes, and recently many of my friends have been getting manicures and eating in fancy restaurants thanks to the vouchers.
The company were offered $6bn by Google but declined thanks to strong growth. Although the UK market seems to be going well for them (recent reports suggest it could float at a valuation of up to $25bn now) it seems US revenue is down 32% in March in America. Will this pattern spread to our side of the pond?
A typical daily deal from Groupon UK
There are a couple of issues I have with Groupon’s business model which I want to discuss.
Firstly a lot of deals are one of deals that customers are unlikely to repeat again, due to their novelty or just because of their amazing prices. For example, I bought a fish pedicure deal – something I wouldn’t do again but I was tempted because I wanted to try it out and because it was only £9.
Secondly, many of the venues and businesses signing up to the deals are small outlets with only a few members of staff, and they honestly cannot handle the demand once their deal has gone online. A friend bought a beauty deal at a small salon in Fulham, and is desperately trying to get an appointment only to be told yesterday that due to an overwhelming response the salon cannot take any weekend bookings for the forseeable future! Great…
This leads to staff being overworked and angry – which may mean they won’t give their usual level of customer service – again meaning the customer is unlikely to return.
Finally another issue I have with Groupon is that their daily offers are beginning to get pretty repetitive. If it’s not beauty treatments, it’s spa breaks or teeth whitening. If Groupon began to offer some exclusive deals that were unavailable to the public even at full price (For example a guided tour around the completed 2012 Olympic Stadium) then they could gain an edge against competitors.
And competitors are increasingly threatening for Groupon. Sites like TopTable, and TravelZoo are increasing their daily deal offering, and the launch of Facebook deals could become fatal thanks to their superiror technology and experience in mobile location.
Future predictitons for Groupon involve an increasingly cosy relationship with Apple, and also the Starbucks CEO which hints at mobile commerce innovation in the future.
Although things are looking good in the UK at the moment, time will tell whether we’ll all get the daily deal fatigue soon.
Tags: Apple, CEO, Groupon, Starbuck, TopTable, Travel Zoo, UK, US
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