With the withdrawal of two major players in the daily deal market, one has to wonder if the whole practice is declining.
Facebook, after only four months trial period, disabled the Deals section and they have 750 million users. Business Week reported recently that Yelp will be cutting down on its daily deals product as well with half the sales team being cut in half and the company will be refocusing on its core business of local reviews. Yelp, having had more experience within the local businesses than most, has already expanded into more than 20 cities with daily deals and so their retraction from the market will have to be slower.
Groupon, the company that led the way within the daily deals market, with 115 million subscribers has dropped by 50% in web traffic since July 2011. These statistics come from web analytics firm, Experian Hitwise. Its primary competitor, LivingSocial, saw a 27% rise in traffic during the same time period.
While there are still plenty group buying startups in the market right now, the bigger players are realising that this business is an unprofitable business model which is creating customer fatigue due to the intense competition within the market. According to the stats, 52% of the US consumer market says that they feel overwhelmed by the amount of daily deals they receive.
Groupon is attempting to differentiate themselves from the staunch competition by using a location-based real-time daily deals service called Groupon Now. But only time will tell whether it will generate enough income to justify the high costs of sales and marketing.
Evidently, the daily deals era is coming to a close and only those companies that are able to adapt and evolve will be able to survive after it is finally over.