Posted January 28, 2011 1:39 am by with 8 comments

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We have talked about the LivingSocial v. Groupon situation here before. It’s always interesting how readers respond. There appears to be a very misguided line of thinking that Groupon has the lead in the daily deal space that is insurmountable and all others should just fold up their tents and call it a day.

Well, Amazon didn’t just give LivingSocial $175 million because it was feeling generous. It did it because it felt like there was room to take a shot at Groupon. If the traffic chart below from Experian’s Hitwise is any indication they may be right.

The key right now is that LivingSocial has to maintain the momentum that was generated by their Amazon gift card play earlier this month. That show of strength did wonders for the brand and took a bite out of Groupon’s traffic as well. If they let it go though and don’t push to keep the interest level high this could end up just being a one time event that will be a blip rather than a trend.

I think the whole Groupon frenzy has shown just how quickly things can get out of control in this current market. Groupon apparently thumbed its nose at Google’s $6 billion offer then has recently tried to tone down IPO talk that was placing the company at a roughly $15 billion valuation. All of that seemed to happen too quickly to be real and this quote from a Crain’s Chicago Business article this week shows that Groupon may be trying to dial back the hype a bit.

Groupon Inc. hasn’t decided whether to go public, board member Eric Lefkofsky said.

“There’s no definitive answer,” Mr. Lefkofsky said Tuesday. “We’ve made no decision at the present moment whether we will or won’t. We’re talking to bankers. We do talk to bankers all the time.”

Speculation about a potential Groupon IPO has been rampant in recent weeks, but insiders are downplaying the idea. Groupon CEO Andrew Mason told reporters Monday in Europe: “We’ve met with a bunch of bankers. We’re exploring whether or not it makes sense for us.”

Now the dust is starting to settle and the hypnotic hold Groupon seemed to have on everyone is being lifted a bit by a competitor. This is the kind of thing we all had hoped for in the search space so Google would have to try harder. In an area as new and as repeatable as the daily deal space there may be some hope for at least two real players to emerge if these traffic reports are any indication. Oh and let’s not forget that Google is working on its Offers offering which may or not get traction but at least it’s being done with a huge cash war chest to support it.

What’s your take on the daily deal space? Is it being over-hyped? Is it the future? Will Groupon stay out in front or are they truly vulnerable?

  • LivingSocial is really growing and expanding, and I think they are some real competition for Groupon. They have a lot of interested consumers, and a lot of growing business.

    A great way to find the deals and sales available in your area is They’ll send you a daily email, allowing you to decide what deals to try out.

  • Sally and Nora

    Blah blah blah. I have nothing relevant to say and just want to put my sites link here.

    • These posts tend to attract these types.

      • Christina Lowell

        I think you should cover At least they are funny and what if they were telling the truth ;-P


  • Groupon is definitely going to regret not selling when they had the chance… and it’s not just because of LivingSocial… there are a lot of copycat sites out there…. many ways to build a mousetrap. Personally, I have purchased numerous options more for an educational purpose than that of an actual deal, and I have been extremely pleased with the way LivingSocial has handled it.

  • Peter Couch

    I check more often then I check groupon now.

  • Yes, what was the purpose for Groupon turning down Google? Now you are seeing more competition in the market, and of course we are always looking for deals. Let competition thrive!

  • I’m also of the *strong* opinion that Groupon should have sold to Google, for one simple reason:

    There is no ‘brand’ loyalty in Group buying; the very nature of the audience is that they are motivated mostly by saving money. I’ve heard that many businesses are complaining about the quality of Groupon customers, namely that they are a ‘hit it and quit it’ type of crowd who want the one-time deal and never come back.

    So people will flock to whichever deals are the best, on whatever site is offering it, much like we saw with the success of LivingSocial’s Amazon deal. Amazon owns the universe, and of course millions of people would want an Amazon gift certificate. Hence, LivingSocial blew up for a week.

    I think what we are going to see is a slow degradation of Groupon’s hold on the market, as well as the concept of daily deals in general. We’re all going to expect deals every where we go, and no one’s going to want to buy anything at full price anymore.

    All that to say that Groupon should have flippin’ sold out when they have the chance…