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March 11, 2012

The Dail Deals Bubble is Going to be Grouponed

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The daily deal Marketplace that was just a year ago was considered a new web goldmine buzz seems to have  been slowing down.. and the euphoria on Groupon going with its IPO  has subsided 

 In a recent post on Christian Monitor ,Joshua Brows underscored a few points which  ails  the Dail Deal marketplace and why Groupon seens to be battling time  and hoping for a acquisition" which could take the Buzz out of Business and concentrate on its core competence ,

Groupon is primarily a local e-mail marketing company that is hoping to transform into a local advertising powerhouse. This potential opportunity is not lost on the market, as companies including LivingSocial, Travelzoo, (AMZN),  and Google  have launched daily deal services as well. Although Groupon has incredible brand recognition, it's not clear why merchants would avoid using the competition, particularly if they receive other services or better terms.
Customers and merchants have no switching costs in the Daily Deals Marketplace . Consumers typically subscribe to multiple e-mail lists,  and its  the value of the deal and the quality of the merchant drives the transaction, not the company that e-mails the offer.

The firm has no meaningful intangible assets, and it doesn't enjoy network effects. Groupon is essentially a sales agent and intermediary between local merchants and consumers. Consumers are free to use competitors such as LivingSocial, Amazon Local, or Travelzoo's Local Deals and gain little to no benefit from using Groupon repeatedly. Moreover, LivingSocial has shown no signs of slowing growth although it has a smaller base of merchants and customers.