Inc Well | Small Business Advice for Chicago Entrepreneurs
A how-to blog for Chicago business

Is Groupon’s Future Looking its Bleakest?

Email
|
Print

    NEWSLETTERS

    Not too long ago, the prevailing wisdom around Groupon said the business would survive any economic storm.

    In 2009, stories were written about the business describing it as “magical,” “recession-proof” and “savvy.” This is not intended as a dig or a hatchet job at all — it’s merely a testament to how wide-eyed and hopeful we all used to be. We have learned there is no such thing as a “recession-proof” business. Everything has its weakness, and Groupon is now officially being described as “underwhelming” on the heels of the company's recently reported quarterly results.

    The forecast is not good: The company has lost a quarter of its market value. Fourth quarter revenue in 2012 was $638.3 million, and in the same quarter in 2011, it was $492.2 million. The company has also reported a net loss and an operating loss in the most recent period.

    “Underwhelming” is the word, because there has been a lot of buzz about Groupon hunkering down and recommitting itself to its core strategy, but it’s starting to look like it might be too late.

    It’s not that the daily deals business model doesn’t work, it’s just that Groupon seems to have lost some of the magic it helped ignite. LivingSocial just raised $110 million in financing from investors and Google has reportedly made it “far easier” for advertisers to do daily deals.

    But when it comes to Groupon, it’s possible its previous core competencies are where it’s spreading itself too thin unnecessarily.

    Reportedly, Groupon Goods is faring better and marketing expenses overall have been dropping. It’s possible that after all those days when Groupon acted as if their email in your inbox was all you needed from them is no longer true.

    So maybe it's time for Groupon to move on and try something else within the brand's scope?

    David Wolinsky is a freelance writer and a lifelong Chicagoan. In addition to currently serving as an interviewer-writer for Adult Swim, he's also a comedy-writing instructor for Second City. He was the Chicago city editor for The Onion A.V. Club where he provided in-depth daily coverage of this city's bustling arts/entertainment scene for half a decade. His first career aspirations were to be a game-show host.