Group Buying Mania

New Data From Groupon Confirms It’s Peaked in Older Markets

coupons New Data From Groupon Confirms Its Peaked in Older MarketsBad news for group buying from local daily deal aggregator  and number-cruncher Yipit. Following on some earlier analysis based on the start-up’s S-1 filing, the initial paperwork required for an IPO, Yipit finds that Groupon’s numbers are getting worse with time. In Boston, the company’s second-oldest market, subscribers are buying fewer Groupons and revenue per merchant is waning, Yipit’s Vinicius Vicanti writes. As Groupon spends more to acquire new customers, its subscriber base is buying fewer Groupons. “That’s not good,” is Mr. Vicanti’s kicker.

Not good for Groupon, but also not good for Yipit and other start-ups tangent to the group buyosphere, which includes aggregators like Yipit and Dealery as well as start-ups like Citypockets, a daily deal organizer and second market. If customers get tired of buying Groupons–which we speculated they might, as customers realized getting value out of coupons takes work and the payoff is countercyclical to the economy–the bloated daily deal industry will considerably shrink.

One bright spot: instant coupons. With partnerships between services like Foursquare and Groupon, merchants can now leverage group buying economics to recruit new customers on the spot–a highly efficient mechanism for bringing thrifty, but lazy customers in exactly at slow times. The instant group buying shift may not help Citypockets, but it’s great for Yipit, which in addition to aggregating deals has branched out into providing competitive market research to the daily deal industry.

And the e-coupon craze is far from over. Betabeat just got a note yesterday from Coupons.com, “the leader in digital coupons,” which just received $200M in funding in June and is estimated to be worth $1 billion. And no one has really figured out the best way to capitalize on the demand for Seamless promo codes, which is raging. Or maybe that’s just us. Yipit?

Follow Adrianne Jeffries on Twitter or via RSS. ajeffries@observer.com

Comments

  1. Really? says:

    You’re kidding with this headline, right?  The YipIt article you linked to says Boston revenue increased 17% this quarter.   For context, that’s a (1.17)^4 – 1 = 86% annualized growth rate.   That’s slower than they had been growing, but I imagine a lot of businesses would love it if this was how growth “peaked” in mature markets.  You know who I mean, real slow growing dogs like Amazon (6% growth over the same period) or Apple (16% growth).

    1. Anonymous says:

      The number of Groupons sold per 1k subscribers also dropped 17%. Which is kind of a funny symmetry now that I think about it. They’re adding more subscribers, who like early subscribers, bought a bunch of Groupons at first and then realized they weren’t worth it to keep track of. The gangbusters days of group buying novelty are over–that’s my take.