we have talked about this, about how those that create nothing, try to capitalize on those who actually do the work and build businesses,
that businesses would wake up to the scam that is these bogus marketing scams,
let me see, give away your business, and we will pretend to pay you, but at least you have a new customer........
mind you, not a qualified customer, a bottom feeder that will drop you for the next 'deal' from some other sucker
yeah, what can possibly go wrong with that,
Merchants and Shoppers Sour on Daily Deal Sites
Leah Nash for The New York Times
Dyer Price, center, owner of Muddy’s Coffeehouse in Portland, Ore., said her business lost money on a Groupon deal. "We will never, ever do it again," she said.
By STEPHANIE CLIFFORD and CLAIRE CAIN MILLER
Published: August 17, 2012
As their e-mail in-boxes filled with daily deal offers from Web sites like Groupon, Lea Pische and Edwin Hermawan, a pizzeria waitress and a former lawyer living on the Lower East Side, finally decided to buy one: a discounted Skillshare class on how to start a business.
Edwin Hermawan, left, and Lea Pische created a Web site to help people unsubscribe from daily deal e-mails.
Their business plan? It was a service that would unsubscribe people from all those daily deal e-mails.
Three months after its introduction, UnsubscribeDeals.com has 7,800 unsubscribers, a number that nearly doubled in the last month. Ms. Pische and Mr. Hermawan tapped into deal fatigue, a malady that has been afflicting the small businesses that offer daily deals and is now hitting consumers too.
Daily deal services — like Groupon, LivingSocial and Google Offers — took off because they seemed to offer something for everyone: small businesses got a novel way to bring new customers in the door, shoppers got a discount and the deal providers got a large cut of every sale.
But signs of deal fatigue are everywhere, raising questions about whether Groupon and its competitors can continue their hyper-growth.
In the last six months of 2011, 798 daily deal sites shut down, according to Daily Deal Media, which researches the industry.
When Groupon reported its second-quarter results this week, it said that active customers — defined as people who purchased a Groupon deal in the last year — grew just 1.1 percentage points, a significant slowdown from customer growth rates in previous quarters. While traffic to Groupon was higher at the beginning of 2012 than last year, it was down almost 10 percent in May and June from the same months in 2011, according to comScore.
Shares of Groupon have fallen 82 percent since it went public in November, and the company is now worth just $3 billion, half of what Google offered to buy it for in 2010.
Gilt City, a daily deal service owned by Gilt Groupe, laid off employees and closed offices in six cities earlier this year. Google Offers, whose membership has plateaued in some cities, has had to team with 35 other deal providers to supplement its own selection and help other companies reach customers. Facebook and Yelp were quick to jump on the fad, but backed off last year. Groupon is searching for alternative ways to make money, like buying movie tickets, watches and other goods and selling them to shoppers.
“Many of the other competitors have retreated or scaled down ambitions,” said Jordan Rohan, an analyst with Stifel Nicolaus. “There are no real barriers to entry, but there are fairly significant barriers to success.”
One of those barriers is keeping merchants happy. Though small businesses were excited at first about a new way to attract customers in a post-Yellow Pages world, many soon soured on the daily deals. Customers who bought deals overwhelmed the businesses, spent the bare minimum and never returned.
The scene on a three-block stretch of Mississippi Avenue in Portland, Ore., is a snapshot of what is happening nationally, as merchants grow increasingly wary of daily deal services even as more daily deal salespeople try to court them.
Muddy’s Coffeehouse, which serves coffee and granola in a purple-trimmed Victorian home, offered $24 of food and coffee for $12. It paid Groupon half of that. Muddy’s succeeded in drawing crowds — but ended up losing money.
“I pretty much had to take a loan out to cover the loss, or we would have probably had to close,” the owner, Dyer Price, said. “They don’t warn you that you’re going to get hit really hard and that you have to be prepared. We will never, ever do it again.”
A few doors down, Mississippi Studios & Bar Bar, a former Baptist church that became a live music club and burger and cocktail restaurant, offered a Groupon deal but said it slowed down the bartender, who had to complete paperwork for each coupon, and brought in customers who did not return.
“It was a huge boondoggle for us, and we were counting down the days until it was over,” said Kevin Cradock, co-owner of Mississippi Studios. He said he had a better solution for local advertising. “We still do the old-school thing,” he said. “We print these posters and hire kids on bikes to put the posters up.”
He also tried Google Offers, whose deal was easier to process because Google sent an Android phone to scan coupons, but it did not attract repeat customers, either.
The story was the same elsewhere. Kevin Stecko, founder of 80sTees.com, offered a Groupon deal for $20 off a $40 order, of which $10 would go to Groupon. Initially, the results looked good: 971 coupons were sold, and almost all of the customers were new.
But Mr. Stecko said he lost $2.96 per order on average, and only nine of the customers who used the Groupon deal had bought something else from the site since then. (He made some money, though, he said, because 14 percent of people who bought coupons did not redeem them.)
“It devalues your product,” said Rafi Mohammed, a pricing consultant. “You get people who come in who are very price-sensitive, who aren’t going to come back and pay full price.”
Groupon has added tools to help merchants with some of their most common complaints, like a scheduler so they can avoid an overwhelming rush of customers. The company said that in the last two quarters, half of its offers were from businesses that had previously used Groupon.
But that might not matter if shoppers continue to tire on daily deals.
Tamara Koedoot, 47, a real estate agent in Portland, has spent about $100 on four deals a month for several years. But lately, it has been testing her patience, partly because she said businesses discriminated against her for using coupons.
“As soon as they find out you have a Groupon, they don’t even want to work with you any longer, so that’s a turnoff,” she said.
Ms. Koedoot has cut back on buying deals because she has lost money when coupons she bought, like one for a Spanish language course, expired, or when she could not get restaurant reservations before the expiration date.
“My thoughts have definitely changed, and I think my friends are kind of feeling the same way,” she said. “We’ve got to quit buying so many of them because it’s like, ‘We’ve got this Groupon, we have to go now.’ ”
UnsubscribeDeals.com has become a support group for shoppers who are fed up with deals.
Some commenters take issue with the frequency of the e-mails, while others complain about the quality of the offers. “I once got a Groupon for teeth whitening,” one person wrote. “I went to the office and the receptionist gave me some bleach and told me to do it at home. She said it would be extra if I wanted the dentist to do it.”
A version of this article appeared in print on August 18, 2012, on page B1 of the New York edition with the headline: Ready To Ditch The Deal.