We were all surprised to see Groupon’s US revenue decline 30% in February, but apparently that’s just the beginning.
Yipit, as a daily deal aggregator, indexes offers from more than 400 services, including Groupon and LivingSocial. We ran some numbers from our database, and it turns out Groupon is having an even worse March than February (down 32% in major North American metros).
According to many, Groupon’s decline signals general Daily Deal fatigue – that users are tiring of the 50-90% off value proposition. The only problem is…
LivingSocial is up 59% in March and is now generating as much revenue as Groupon in major markets.
The top 20 markets represents most of Groupon and LivingSocial’s domestic revenue. Already saturated with competitors, the top metros give a glimpse to how things may eventually play out everywhere.
Possible reasons Groupon is declining in a growing market:
Groupon now sharing people’s inboxes with competitors. LivingSocial has more than 25 million members, meaning a growing portion of Groupon subscribers are now subscribed to at least one more deal service. Users who had previously been members of services like DailyCandy, Thrillist, UrbanDaddy, Travelzoo or OpenTable have now started to receive Daily Deals from them as well.
personalised Deals not working, may be hurting. Groupon has begun emailing multiple offers in major metros, the sorting determined by user preferences and zip code. Today in NYC, there are more than 20 offers to choose from. This is a big step away from the one-deal-a-day user experience that gave Groupon its early success. Further, while more offers allows zip code level targeting, the tradeoff is lack of focus on the best possible offer. I am more likely to forward along an offer from an amazing business than from a less popular one that happens to be in my zip code. LivingSocial’s average revenue per offer is approximately $24,000, while Groupon’s is now $13,000.
Groupon topping out in narrow demographic. Young, single-oriented Groupon has 68% of subscribers between the ages of 18 to 34, while 64% of LivingSocial’s is 34 and above. Groupon’s competitors may have a broader appeal as the Daily Deal universe expand beyond young singles.
As a disclaimer, the data above represents Yipit estimates. We aggregate deals from Groupon, LivingSocial and more than 400 other Daily Deal sites, and recommend them to users based on where they are and what they like. Though every effort is made, it is possible that not all offers are accounted for from either site. These values are certainly directionally indicative of trends for major players in the market. We have not included proceeds LivingSocial’s Red Cross Relief Effort in this calculation.