Is Groupon replaceable?

Can anyone unseat Groupon as the local deals leader?

If you’d asked me before the Super Bowl, I would have laughed at this question. Even without backing from a large company, Groupon has managed to dominate the daily deal market, and is a huge favorite among cost-conscious shoppers. Even my mom asks about buying things from Groupon.

Chart courtesy of EvanMiller.org

Buying things from Groupon used to be cool. I’d receive offers from local companies and then share those same offers with my friends. It felt like we belonged to a special club that only the cool kids knew about.

And then came the Gap deal.
We ooh’ed and ahh’ed and everyone told their friends. Groupon’s site was nearly overloaded with customers, but they came at a price – they were no longer a local deal company. The daily deals for obscure local places were no longer a cool thing we shared with our friends.

Groupon persevered. Reported sales of the Gap deal were in the $11 million range, proving that people value saving a few bucks over pretty much everything else. Most communities oppose Wal-Mart, but they do pretty damn well once their store is set up. Principles last until they start costing us money and Groupon knows this.

Their Super Bowl ads showed it. Sure, it was crass and inappropriate to make light of another country’s struggle in order to sell discounted dinners, but most Americans have no idea what’s happening outside their hometown let alone country, as the hypocrisy runs deep in all of us.

Success from a Groupon deal relies on finding those repeat customers. It’s much cheaper to sell to someone who’s already familiar with you, but, according to Groupon, only 22% of customers make a return visit after using the Groupon deal. Stories abound regarding small businesses losing money on Groupon offers, but Groupon, and now Amazon-powered Living Social, march on, determined to saturate the market in a race for the bottom. Cost-conscious consumers seldom make great repeat customers, as they will always leave for the best deal.

The question isn’t if anyone can unseat Groupon as the local deals leader, but as channels dry up and companies neglect to write off Groupons as a marketing/advertising expense, but rather: why would anyone want to?

(UPDATE – Bait and switch stories like this one from TechCrunch certainly isn’t going to help. And is it even a good thing that they pulled their Super Bowl ads?)

About Tyler Hurst

Tyler Hurst is a Phoenix-based writer, storyteller, sometimes marketing guy and full-time inspirator. He likes to think he can help people.