Well that didn't take long. Yesterday Facebook announced that it was stepping back from it's 'deal' platform. "After testing Deals for four months, we've decided to end our Deals product in the coming weeks," the company said on Friday in a statement emailed to Reuters.
Scanning through the feeds we follow here at Sunrise Marketing we noticed that Yelp was also scaling back their deal programs. I had spoken with a Yelp representative earlier this week about the enhanced program they are offering retail businesses and restaurants. While there is value in adding video, photos, and ad placement, at Sunrise Marketing we found that the fall back for many of these offers were heavily discounted deals. It didn't seem to help restaurants other than attracting bargain hunters. However, it was viewed as a cash cow for discounters like Groupon.com, Living Social and others.
“The big players are exiting because the business is not making a dent in their revenue numbers,” said Sucharita Mulpuru, an analyst at Cambridge, Massachusetts-based Forrester Research Inc. “The space is not as large as everyone thought it was.”
In related news Hitwise reported that Groupon.com saw sales fall 50% from a highwater mark in June.
"Overall, visits to Hitwise's custom category of Daily Deal & Aggregator sites were down 25% for the same time period. What explains the decline -- and Groupon's in particular?
"Perhaps it is simply a case of increased number of competitors and deal fatigue among consumers or simply not enough of the right deals," Tancer suggests.
At Sunrise Marketing we've helped several retailers experiment with Groupon.com and the results are mixed, but one thing is certain. Sustainable business cannot be built on a foundation of deep discounts.
At Sunrise Marketing we help retailers and restaurants structure their own promotional efforts through mobile marketing, Facebook integration, as well as e-mail marketing and website updates. Providing the small business owner with this level of control allows them to create promotions on their own terms - not Groupon's, Yelp's or Facebook's.
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