Is the Groupon bubble about to burst?

Suffice to say it hasn't been a particularly good week for former online darling Groupon.  Lets round up the culprits.

Exhibit A – Small business owners hate Groupon

Research from iContact revealed earlier this week that small business owners aren't big fans of social media, but by far the most disliked was Groupon, with 70% of small business owners saying they hate the coupon site.

Exhibit B – Majority of Americans say no to coupon sites

This research from Accenture reveals that 56% of Americans do not subscribe to a deal site. Even more interesting, 42% said the “do not like anything” about daily deal sites.

Exhibit C – Groupon is losing money.  Lots of money

With a stock flotation in the pipeline The Economist reports that in 2011 Groupon is set to make a loss of $280m on revenues of $1.69 billion.  That's pretty impressive levels of red ink.

So all in all not a very good week for Groupon.  With barriers to entry in this sector so low and a growing number of merchants and consumers reporting bad experiences with such sites, are we seeing the end of Groupon et al?

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10 thoughts on “Is the Groupon bubble about to burst?

  1. This is classic. If you think back a year to when there were rumours of the company being bought by Google for several billion dollars. As with so many things in life, timing is everything and I bet the owners of Groupon wished that they'd bitten Google's hand off. Without doubt this business model is a busted flush.

  2. I see Groupon classed as social media a lot and I'm not really sure it is. As for the business model, it probably can work but it would have to change from how it's currently setup.

  3. @Mike, you're not wrong there. I think they missed out big time, although given the venture capital they've raised in the past year or so I'd still say that the founders have done ok out of the site.

  4. After Groupon's meteoric rise and sudden fall from grace, the company is trying to re-establish itself as a mature, profitable enterprise. Three German brothers — Marc, Oliver and Alexander Samwer — came in and clamped down on high pay and set up a rigorously disciplined — and unpopular — system for managing sales reps. "They are extreme capitalists," says one insider. "For them there is no soft and fluffy side of the business. They're revenue driven, not people driven."
    http://www.businessinsider.com/inside-groupon-the

  5. Groupon is poised to price its initial public offering $1 to $2 above its current range, responding to stronger-than-anticipated demand, so it would appear not.

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