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Groupon: Is The Daily Deal King's Crown Slipping?

07 December 2011COMMENTS

Groupon are back in the press today after 2 more ASA rulings for misleading advertisements. This follows a bad few weeks for Groupon as national press coverage threw criticism from several different angles.

The OFT (Office of Fair Trading) are already investigating their trading practices generally, as businesses claim they were mis-sold the benefits of joining by Groupon representatives. Combine this with over 50 complaints to the ASA this year for breach of advertising codes and Groupon appear to be in trouble. You would think a company worth £13 billion would know better.

The initial popularity of Groupon is waning. It had fast become one of the UK’s most top visited sites with over 5 million visits per month*, only beaten by the likes of Tesco, Amazon and eBay. But traffic is starting to fall. In October the unique audience dropped by around 13.5%*.

It seems the initial buzz around the service is in decline. Customers are wise to the ‘terms’ that feature alongside deals, reviewing the fine print to check whether the voucher must be used between 1-3am on a Tuesday morning when we are wearing sunglasses**.

And it’s not just consumers that are wary of the service. Businesses reducing prices for a Groupon deal risk losing thousands of pounds if they can’t keep up with demand. Unexpectedly high take-up on deals that make a business little or no profit don’t seem to be worth the risk. Especially if you’re offer is launched over a weekend and there is no-one to contact at Groupon to close the offer.

The Groupon conundrum isn’t new. Businesses believe offering a one-off deal will encourage repeat purchase of services, when in actual fact people that use Groupon are just looking for a really cheap deal.

So does renewed negative press mark further decline for Groupon? Criticism is ongoing from leading tech blogs and magazines such as TechCrunch, the Guardian, The Huffington Post, Mashable and Business Insider. Groupon certainly need to stop misleading their customers as this will ultimately turn people off.  

* Source: UKOM APS/NetView, Oct 11 (Internet Applications Included, Home & Work)
** Fictional terms used as an example.

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Author.

Louise Kilding
Louise Kilding (Senior Account Manager)

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