Groupon has been struggling lately, and here’s why

To the folks who follow tech news, Groupon’s recent struggles come as no surprise. However, their stock is now taking a serious beating, and it’s probably long overdue. Ever since this summer, Groupon’s stock has been declining at a slow and steady rate. But recently it’s dropped a sizeable amount – around 30 percent.

In June, the stock sat at close to six dollars per share. When November of 2016 hit, the stock dropped tremendously, sitting below three dollars per share. Bloomberg Business projected Groupon’s revenue will miss expectations by around 100 million this year (as cited in Fortune).

So after high initial expectations, why is their valuation plummeting? Simply put, Groupon helps consumers save a lot of money, but it doesn’t help businesses at all. At Bixy, we’ve discussed Groupon’s disastrous effects on businesses for some time. Running a Groupon devastates a business’s profits and doesn’t generate significant repeat business.

It gives us no pleasure to say, “We told you so” (well, maybe a little), but the main point we’d like to drive home is this: For Bixy (or any advertising technology) to work, it must help both businesses and consumers. This balance is essential, and Groupon was imbalanced from the very beginning. Bixy’s model is different.

We don’t take a cut of the revenue from the coupons running on Bixy. In fact, we have a free tier to help out small businesses at absolutely no cost. Any boost in sales from this model is a win for businesses. Bixy allows brands to easily track their revenues and increase loyalty. It’s simple, and the incentives of the business and consumer are aligned.

Businesses tell us what the deal should be, how long they want it to be available, and how many times a consumer is able to use the coupon. It’s a more effective way of advertising a deal without losing money from the advertiser. The consumer is able to chose all the brands they want to see and easily access the deals those brands provide. There’s no more keeping track of paper, and all coupons are hosted in a consumer’s online feed at Bixy.com. Consumers save money, businesses make money, and they aren’t charged for the online advertising.

It’s a win-win.

Sources: 

https://techcrunch.com/2011/06/09/groupon-single-worst-decision/

https://www.bloomberg.com/view/articles/2016-10-28/groupon-burns-out-with-deal-for-livingsocial