I read the following article today and wanted to post it here and open up to comments from Groupon and its' competitors.
**Be sure to check out the links following the article.
**Be sure to check out the links following the article.
WSJ(7/8)
Groupon's Boston Problem: Copycats
07/08/2011
(From THE WALL STREET JOURNAL)
By Shayndi Raice and Stu Woo
Stephanie Clarkson, a 40-year-old resident of the Boston suburb of Quincy, Mass., used to use daily-deal site Groupon Inc. religiously. But not any more.
As the number of active daily-deal sites in the Boston area more than tripled over the past two years, Ms. Clarkson started checking out competing sites. Now she monitors 32 of them -- including LivingSocial Inc., Eversave and Opentable Inc. -- for deals on everything from Boston's tapas bars to health clubs.
"If you offer a good enough deal, it doesn't matter who you are," says Ms. Clarkson, a Web developer and bartender, of the deal sites.
Now, as Groupon prepares to go public, the e-commerce company's experience in Boston with consumers like Ms. Clarkson illustrates the challenges it has begun to experience nationwide.
Groupon touts Boston as one of its biggest and most successful markets. The Chicago-based company emails offers to subscribers, typically selling vouchers for 50% or more off the listed prices of goods and services at local businesses. Then it usually pockets half of the voucher's sale price.
But as Groupon clones have proliferated -- from nine active daily-deal sites serving Boston two years ago to 33 today, according to daily deal-site aggregator Yipit -- the loyalty to Groupon of both consumers and merchants offering online deals has eroded.
In its regulatory filings, Groupon said its subscriber base and revenue in Boston have both jumped substantially since the 2009 second quarter, increasing from a subscriber base of 17,000 people and revenue of $700,000 to 800,000 subscribers and $9.3 million in revenue in the first quarter of 2011.
But that growth has already slowed. According to Yipit, the average number of Groupons purchased by a customer in Boston has dropped from 1.9 to 1.7, though the company says the decline is only 1.5 to 1.4. Meanwhile, Groupon's revenue per subscriber in Boston has dropped to about $15 in the 2011 first quarter from about $20 in the 2010 second quarter.
Groupon remains the leader in the Boston market, with revenue of $3.1 million in May. Its closest competitor, LivingSocial, generated about $745,000 in revenue there in the same time period, according to Yipit.
Still, rival sites are gloating. "We've seen our introduction really change the quality and number of deals listing with Groupon" in Boston, said Seth Priebastch, chief executive of SCVNGR's LevelUp, a deal service that entered the Boston market in March.
According to a person familiar with the matter, Groupon's lower revenue per subscriber in Boston could be the result of the company's decision to offer more targeted vouchers and more low-end deals in response to customer demand.
Nationwide, Groupon's cut of the daily deals market has also dropped. Its share in the top 30 metro markets fell to 48% in May from 52% in April, while LivingSocial expanded its share to 24% from 20% in the same period, according to Yipit.
But despite the increased competition, Groupon said in its regulatory filings that it has a backlog of 40,000 merchants seeking to offer deals through its site. To adjust to some of the changing market dynamics, both Groupon and LivingSocial are also trying to offer many deals each day via smartphone services like Groupon Now.
Groupon first entered Boston in April 2009, its second market after its hometown of Chicago. But within weeks, Groupon ran into competition. Eversave was launching in Boston at the same time, BuyWithMe quickly followed in May, and LivingSocial wasn't far behind, entering Boston in the fall of 2009. Ever since, the competition has continued to pour in.
Some Boston rivals quickly began trying to take market share from Groupon by telling merchants offering online deals that they would take a smaller commission than the 50% Groupon typically seeks. Other daily-deal sites, such as LevelUp, don't take a commission from merchants at all unless customers return and the business offers better deals to customers every time they return.
As a result, Groupon has had to increasingly compete for merchants. Brunello Bistro, an Italian restaurant in the Boston suburb of Somerville, Mass., has run successful offers with Groupon but now runs deals with so many sites that Fernanda Nogueira, who handles the restaurant's marketing, said she can't even remember them all.
Ms. Noguiera said she likes working with rival daily-deals site BuyWithMe, partly because BuyWithMe takes 40% of a voucher's value, compared with Groupon's 50% cut. But she added that the eatery tries to work with numerous daily-deal sites "just to see how it's going to be." Others it has tried include EverSave, kgbdeals, OpenTable, HomeRun and CoupMe.
Back in Quincy, Ms. Clarkson last week bought seven vouchers for a total of $170. Three were from Groupon for a restaurant called Redbones. But four were from Eversave for a local butcher named McKinnon's.
(END) Dow Jones Newswires
July 07, 2011 19:34 ET (23:34 GMT)
Copyright (c) 2011 Dow Jones & Company, Inc.
If you live in Boston - Click the following link to see the competing deals:
http://yipit.com/boston/?address=02115
These do NOT include the new Qnanza Deals which can be found here:
http://www.qnanza.com/city.php?ename=Boston
If you would like to be included on the Qnanza email list for Deals in your city:
http://www.CouponSavingsList.com
If you would like to know more about becoming a Rep:
http://www.QponRep.com
