Groupon Copy Cats Saturating the Market

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Groupon may have had first quarter revenue of $559.3 million, but its larger legacy may be creating the daily deal industry.

LivingSocial, SweetJack and countless other sites have followed in Groupon's footsteps since the site opened in 2008, offering daily deals to anyone with an email address. Some have copied the model with more finesse than others - Nopuorg, Groupon spelled backwards, may be the most obvious imitator. International companies have gotten in on the sales. Biglion, in Russia, sells daily deals.

Early in 2011 Gropon sued Scoopon, an Australian deals site that had originally been in talks to sell itself to its American counterpart. It attracted Groupon's attention through the acquisition of groupon.com.au, possibly hindering the site's ability to expand into Australia.


"We don't spend a lot of time worrying about people whose primary competency is their ability to carbon copy something," Groupon founder Andrew Mason said in a 2010 interview with MainStreet.

Many narrowly focused local deals sites have sprung up, and then consolidated. New York City site Scoop St., Chicago's DealADayOnline and San Francisco's Swoop were all purchased by BuyWithMe in 2011.

Local media sites are especially expanding in this arena as many of them have been struggling with decreasing print ads and low-revenue online ads. Deal Chicken has partnered with several newspapers, such as the Des Moines (Iowa) Register and the Asheville (Tenn.) Citizen-Times, to offer daily deals on their websites.

Even as the industry expands, it is gaining a bad reputation among small business owners, many of whom gain new customers, or are overwhelmed by one-time customers who buy the deal.

One UK baker had to make 102,000 after offering a Groupon for 75% off a dozen cupcakes, selling 8,500 coupons.

"Without doubt, it was my worst ever business decision. We had thousands of orders pouring in that really we hadn't expected to have. A much larger company would have difficulty coping," Need a Cake bakery operator Rachel Brown told Mashable late last year. She lost up to £12,500 ($20,000) on the deal.

(c) 2012 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Stocks

Referenced Stocks: GRPN

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