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Half of businesses won't use daily deal services like Groupon in next six months

January 04, 2012|By Tiffany Hsu
  • Daily deal sites such as Groupon and LivingSocial may see fewer businesses using their services in the first six months of the year, according to new research from Susquehanna and Yipit
Daily deal sites such as Groupon and LivingSocial may see fewer businesses… (Groupon )

More than half of businesses that have used a daily deal site such as Groupon or LivingSocial in the past say they won’t be doing the same in the next six months, according to a new survey.

Even though 80% of companies said they were satisfied with their experiences using the discount promotion services, 52% said they’ll hold off on repeat partnerships for the first half of 2012, according to data from Susquehanna Financial Group and daily deal aggregator Yipit.

Less than three-quarters said they’d offer even one such deal.

Many businesses may be holding off because of concerns about the daily deal model, which they said doesn’t always convince customers to return for repeat visits. Coupon users instead grow to rely on the deals and become hesitant to pay full price, limiting businesses’ ability to get customers to buy more expensive items and upgrades.

But the survey also found that companies who partnered with LivingSocial and Groupon saw the experience as a way to diversify their marketing efforts. Nearly half said they landed more customers because of the arrangement, and about 10% said the deals helped boost revenue.

The majority of deals are focused on health, beauty, food or drink options, according to the survey.

In November, despite a broader daily deal drop-off because of Thanksgiving, Groupon's grew 6% from October to $154 million in gross billings, according to a separate Yipit report Wednesday. The company saw record performance in its travel and consumer products segment. LivingSocial dipped 5% from October to November. 

But overall, daily deal companies still managed a 2% gain from October to November to $273 million.

Still, Groupon’s shares have dipped below their initial offering price of $20 in November. The stock closed down 48 cents, or 2.5%, to $18.79 on Wednesday.

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