Yelp is scaling back its daily deals product, Bloomberg reports.
It’s still going to do some daily deals but it is slashing its deals salesforce by half and focusing away from the product.
This is pretty significant. Yelp has relationships with merchants and a big consumer presence.
One problem is that some people say Yelp has an adverserial relationship with merchants. Merchants can only control comments and reviews on their page if they buy advertising, which some merchants view as a racket. (Update: A Yelp rep emails us to say advertisers no longer have control over reviews. Still, it’s quite possible Yelp poisoned the well with its adverserial approach and couldn’t get merchants on board with its deals service.)
In any case, Yelp isn’t the only one getting out of the daily deals business. Facebook is shuttering its own daily deals effort, and Google’s doesn’t seem to be going anywhere.
This is a pretty bullish signal for Groupon: everyone’s been saying that the business is vulnerable because it has no barriers to entry and is easily replicable. And yet, that’s not happening. It seems to be the case that running a successful daily deals operation at scale is really a specific, hard thing to do that not everyone can get right, including companies that would seem predisposed to do so.
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