Since the dawn of the first daily deal services in 2010, the market for social buying has quickly grown. But is it fading just as fast? After just four months of testing, Facebook recently abandoned their “Deals” venture. And today Yelp announced that the site is also withdrawing from Yelp Deals.
The oversaturated marketplace for online deals and coupons plus the growing complaints from customers that they are inundated and bored with too many offers may be a recipe for disaster.
Despite criticisms from the media, industry leaders, customers, financial analysts- literally from all angles, Groupon CEO and co-founder Andrew Mason stated in a leaked memo:
“Dear Groupon,
This weekend, I did a Google News search on our company — my first in awhile. The first story that popped up was called The Fall of Groupon: Is the Daily Deals Site Running Out of Cash? I laughed when I read the headline (in the car by myself, weirdly).
First — with this article, the degree to which we’re getting the shit kicked out of us in the press had finally crossed the threshold from “annoying” to “hilarious.” Second, I was struck by the irony — I had just finished a board meeting last Wednesday saying this to myself: I’ve never been more confident and excited about the future of our business.”
Read the rest of the exclusive memo at AllThingsD.
Here are a few other things to consider:
- Only 56% of businesses make a return when participating in group deals.
- One in five purchased coupons or deals are never redeemed.
- Today there are over 650 daily deals sites – You can visit Yipit to help aggregate the best deals for you.
- For the first time this past July more deals sites were closed (38) than created (36).
Businesses and deal services will explain that when customers don’t redeem their coupons, they actually end up winning. Obviously earning money with no actual service tendered is ideal—basically earning money for nothing.
But word gets around; consumers don’t want to feel like they were taken advantage off. And many are saying that the novelty behind group purchases and daily deals may be dying.
In a survey from RetailMeNot, it was found that “68% of online shoppers use daily deal sites more for impulse purchases than planned purchases.”
What do you think? Are Facebook and Yelp forecasting a soon to be decline of group-deal services?
Have you felt like your inbox is bombarded with “specials” and “deals” that don’t interest you? Or do you still love these offers?
Share your thoughts with us on Facebook.