Groupon Traffic Declines Nearly 50%

Has Groupon's ship sailed? Well, with its IPO pending, the group-buying leader has seen traffic decline nearly 50% since its peak in the second week of June.

That's according to new Hitwise data based on Web-based traffic, but excluding mobile and app-specific traffic.

"Regardless ... the drop-off in Groupon traffic this summer has been significant," according to Bill Tancer, GM of global research at Hitwise.

During the same time period, rival Living Social saw a 27% increase in visits to its site.

Overall, visits to Hitwise's custom category of Daily Deal & Aggregator sites were down 25% for the same time period. What explains the decline -- and Groupon's in particular?

"Perhaps it is simply a case of increased number of competitors and deal fatigue among consumers or simply not enough of the right deals," Tancer suggests.

Groupon did not return a request for comment by press time on Monday.

According to a Local Deals Survey released by PriceGrabber in June, 44% of respondents said they use or search daily deal Web sites. Yet 52% expressed feeling overwhelmed by the number of bargain-boasting emails they receive on a daily basis.

Another key factor in the daily-deal market for these sites "is to focus on ... attracting new and preferred audience segments via the inbox," Tancer adds. "Currently, the audience segments for both Groupon and Living Social are very similar, so it will be interesting to see how both sites ... perform heading into the holiday season."

Looking into the future, Forrester recently predicted that the daily-deal market will be virtually nonexistent by 2016.

"Standing out above the clutter [will become] harder for marketers as ad exposures grow," Forrester analyst Shar VanBoskirk explained in a report released last week."Consumers will grow so conditioned to micro-impulse offers they'll lose practice at considered decisions ... Facing a cultural descent into maladroit judgment, employers (and spouses) will blacklist impulse deals to keep people intentional," he noted.

Still losing money, Groupon said in June that it planned to raise $750 million in an IPO.

While sales at the Chicago-based company surged more than 14-fold to $644 million last year, Groupon has also reportedly amassed about $540 million in operating losses since its founding in 2008. In short, its costs are rising faster than revenue.

4 comments about "Groupon Traffic Declines Nearly 50%".
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  1. J S from Ideal Living Media, August 30, 2011 at 10:04 a.m.

    Everything Groupon is doing is wrong.

    It's very difficult for a business to offer a coupon that offers goods for 25% of what they normally charge. So Groupon is left offering coupons for (unnecessary) services that would generally target the wealthy -- who don't normally use/need coupons.

    Their web site is anti-local, which is a huge miscalculation for a business claiming to offer insights to local offerings.

    From an SEO perspective, Groupon removes their old content from the businesses they were supposed to promote once their deal of the day has ended.

    Instead of local content about the business' history, offerings, or the local area, the site offers a daily non-sensical "blog" by a "cat" pictured like some kind of god/idol who issues all-knowing edicts about exceedingly random things that are not-funny, not clever, not local, and are frequently insulting or offensive instead. Complaints and concerns about the "blog" are not responded to.

    I suspect that the cat/god/idol is actually revelatory of a God complex entrenched within the company's leadership, which is why they have maintained this traffic-ending strategy.

    Sound extreme? Check out their leaked "style guide" for writing their deliberately non-sequitur-driven style of writing: https://docs.google.com/View?id=dmv9rbh_2g92x4scj&pli=1

    Businesses need to look after their own interests, yet the best way to do that is to focus on serving others well -- their clients and their site's users -- and not being merely self-aggrandizing, or trying to cover over their (many) mistakes.

    People are smarter than Groupon gives them credit for. Why won't the leadership at Groupon see that?

  2. Paul Benjou from The Center for Media Management Strategies, August 30, 2011 at 10:18 a.m.

    The ship didn't sail...it's taking on water and sinking.
    Paul Benjoou
    www.MyOpenKimono.com

  3. Paula Lynn from Who Else Unlimited, August 30, 2011 at 10:39 a.m.

    1. What they "advertise" and what they offer are 2 different things. $20 off of $40 is not 50% off the product or service. 2. Businesses cannot sustain profits for gathering new customers by giving so much away to bargain hunters. 3. Sustaining a local relationship sales staff because repeat business is needed for local customer/business to stay in business. When they run out of the local new businesses, then what ?

  4. Paul Skilbeck from O2 Sports Media LLC, August 30, 2011 at 4:57 p.m.

    The way Groupon works is by exploiting the impulse purchase urge. But unlike successful companies such as Tie Rack that have used a similar strategy, the snap purchase doesn't result in immediate gratification. The customer has to wait to collect the goods or services.

    Sometimes the desire has cooled by the time the customer can make the purchase, or a range of other factors can interfere.

    The result is that many people are not redeeming groupons before they expire. So what's the point of it all?

    I don't have any broad stats to back this up, but I know it has happened to me, and to many of my friends, and since Groupon sends out reminders to its customers to hurry and use groupons before they expire, my guess is it's happened to a lot of people who are now more hesitant to make that impluse buy with Groupon.

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