DailyTech - Google Offers Failing to Compete with Groupon, LivingSocial

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Internet Google Offers Failing to Compete with Groupon, LivingSocial
Tiffany Kaiser - September 13, 2011 11:25 AM

7 comment(s) - last by pixelslave.. on Sep 14 at 1:34 AM

Google Offers struggles to compete with Groupon and LivingSocial (Source: mshcdn.com)

Google Offers, which is only three months old, is having a hard time breaking into the daily deals industry despite its recent efforts to expand its local bargains to more U.S. cities

Not too many companies seem to be having any luck in the daily deals business corner. While Groupon has been successful in its deals venture, it's currently under questioning by the U.S. Securities and Exchange Commission (SEC) after Groupon CEO Andrew Mason released an internal memo to employees last month that "lashed out" at critics and discussed August revenue growth. This move has put its initial public offering on hold for now, since regulations limit what a company can say before a planned IPO.

In addition, Facebook quit its Deals service after a short four months in the business.

Now, it looks as if Google is on its way to being in the same boat as Facebook. Google Offers, which is only three months old, is having a hard time breaking into the daily deals industry despite its recent efforts to expand its local bargains to more U.S. cities.

From July to August 2011, total revenue generated by Google Offers fell 23 percent despite an increase of 22 percent in the number of daily deals ran. Revenue per deal dropped 37 percent, partly due to a 46 percent drop in the number of vouchers sold per deal.

Google even had to increase the price of its vouchers by 18 percent, but it's still much lower than the price of Groupon and LivingSocial vouchers.

Groupon and LivingSocial remain the daily deals heavyweights. Groupon's revenue increased 13 percent in August from July, coming in at $120.7 million, and its market share increased to 53 percent from 51 percent in July.

LivingSocial slipped 3 percent to $45.1 million in August and had a market share decline to 20 percent from 22 percent in July, but still remains in the top daily deals ranks.

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Without merchants, there're no deals

By pixelslave on 9/14/2011 1:34:39 AM , Rating: 2

As a consumer, I love daily deals. But I am also a small retailer, and daily deals rarely help. I can see how it could help business that can naturally benefits from repeated customers. For example, most service based business (restaurant, spa, etc) could be benefited because once a customer comes to your place and you can get him/her to like your service, they will come back. But if you sell mass-produced merchandise (ie, most of the retail stores out there), most people only come to you for the price/convenience. It's much harder to turn someone who lives far away from you into a repeated customer unless you cut your price dramatically.

The daily deal sites are facing this dilemma: less merchants = less customers = slower growth.