Stockholders’ remorse
Groupon has announced that they have made arrangements to buy their main competitor, LivingSocial. While the exact price of this acquisition still remains undisclosed, one thing is clear: Groupon stockholders aren’t happy. Groupon shares went down approximately 9.0 percent in after-hours trading last Wednesday, and have continued to fall.
Why LivingSocial?
Groupon’s long-time rival LivingSocial, which is partly owned by Amazon, has been struggling off and on for some time. When LivingSocial first began, it was amazing. There were daily deals and coupons that couldn’t be beat; over time, however, the money-saving-giant began to struggle.
They attempted to remarket themselves by offering other types of promotions, such as credit card incentives at restaurants, but it simply wasn’t enough to revive the daily deal platform.
Groupon’s struggle is real
Groupon has also been trying to rebrand, or reignite their sales reach by venturing outside of “daily deals,” even expanding their interests into food delivery service, but it doesn’t look like that’s doing too well either.
This makes for an interesting acquisition, given that Groupon isn’t doing much better than LivingSocial.
Customers seem to be losing interest in the concept of daily deal emails.
RIP daily deals?
According to market analyst, Rakesh Agrawal, “Groupon is not an internet marketing business so much as it is the equivalent of a loan sharking business.”
This is an interesting perspective, given that Groupon seems to be making acquisitions in the same manner a loan shark would in valiant last effort to save their business.
It looks as though even Groupon is struggling to keep consumers interested in their “daily deals,” and have considered using LivingSocial’s foothold into other types of promotions to boost their own brand’s reach.
Group buying used to be the hottest ticket on the block and the easiest way to score a huge discount. However, with increased competition and consumer behavior changing (and fatigue setting in), it’s getting more and more difficult to drive deals directly to the consumer and make them prominent enough to get consumer to click-through.
What do you think about the acquisition? Will this boost Groupon’s reach, or are the days of daily deals and super coupons behind us?
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