The online coupon market experienced unprecedented growth and popularity in 2011. As a result, consumers and merchants started to become weary of the discounts and the increasing number of websites, which squeezed margins and cut profits from everyone’s deals. Research shows that 52% of US consumers who use these daily deal sites feel “overwhelmed,” by the frequency of the emails they receive. And 60% feel the daily-deal industry is too crowded.
The daily deal space, which was made popular by Groupon, is feeling the wrath of the research to be true. In addition to Facebook announcing that it would no longer feature local discounts, which began in April, Yelp has decided they want out of the business as well. Additionally, 38 other daily-deal sites closed in July and the online-coupon industry experienced a 7% drop in revenue.
Consumers are not the only ones who are feeling overwhelmed, merchants are too. Some merchants have found that if they run a deal with one company, they will then be solicited by many of the other coupon sites to offer the same or a similar deal. Not exactly the point of running a deal, which is to introduce people to your product and hope they like it enough to pay full price later. If merchants get stuck in the circle of daily-deals they are communicating to their potential consumers that the original prices they are charging are not what their product or service is worth. Although daily deals do have some really great positives, it can become a slippery slope for merchants.
For more information about how the clutter and chaos of the daily deal space is forcing websites to close, go to: http://adage.com/article/digital/clutter-competition-hit-yelp-groupon-clones/229532/