Look How Groupon's Core Daily Deal Business Has Declined

A couple of years ago, everyone seemed at excited about Groupon. Every day, there was a new email in your inbox, offering discount sushi or low-cost yoga. What was not to like?

If you’re one of those people who begun ignoring those emails over the last few months — or perhaps cancelling your subscription altogether — then you’re not alone. Groupon’s so-called “third-party” revenue, which measures its daily deal business, has peaked and now appears to be in a decline:

To the company’s credit, it is handling this setback with aplomb. Back in 2011, Groupon launched a new “direct” sales business, Groupon Goods, which has grown like wildfire. In Q2 2013, direct sales grew 190% to $US190 million. That more than made up for the losses in the old email business, as total revenue was up 7% to $US609 million.

As Groupon CEO Eric Lefkofsky recently told us, Groupon is changing. It is no longer a mass, daily email business.

It now regards itself as a mobile first “marketplace,” which people will use to search for deals. The transformation seems to be working, and that’s good news — because the heyday of the daily deal era appears to be over.

A similar thing appears to be taking place at LivingSocial, which is also moving away from “flash” deals. Despite recent layoffs there, revenues at that company are still growing too.

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