This is a “winter of discontent” for daily deal companies Groupon and LivingSocial, said Julianne Pepitone in CNNMoney.com. Groupon, which was lauded as the fastest-growing company ever before it went public last year, has watched its stock tumble more than 80 percent since its IPO, and CEO Andrew Mason narrowly avoided losing his job last week at the hands of an angry board of directors. Its rival LivingSocial just announced 400 layoffs, about 9 percent of its global workforce, after reporting a major loss in the third quarter. It isn’t just the biggest daily deal sites that have seen earnings dwindle, said Erik Sherman in CBSNews.com. “Only a few years into its existence, the entire online coupon business is struggling.” In the last half of 2011 alone, nearly 800 daily coupon companies went out of business. Whatever their size, these fledging firms appear “only as good as their last deal.”
That’s because coupon companies are best understood as an “odd, short-lived fad,” said Brad Tuttle in Time.com. Now it seems blindingly obvious that selling “$10 off coupons for restaurant meals, manicures, and maid service” isn’t exactly a smart business model. The small businesses offering the discounts have soured on them, since the coupons eat into their profits, alienate long-standing clientele, and don’t attract repeat customers willing to pay full price. For consumers, too, there’s little thrill left in scoring a one-off discount on products and services they might not otherwise have bought. If the market for daily deal sites looked bright, the holidays would be a “heyday” for them. But in fact, daily coupons are expected to be just a tiny fraction of overall holiday sales.
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