Groupon, Other Deal Sites Not a Good Deal for Small Businesses A new report suggests voucher offers largely aren't shoring up new customers or sales.

By Jason Fell

Opinions expressed by Entrepreneur contributors are their own.

Deal Sites

So you spent a considerable amount of money with daily deal websites like Groupon and LivingSocial expecting the offers to drive a ton of new business, only to see your sales needle stay flat. Does this sound like you? If so, chances are you're not alone.

A new report from Cambridge, Mass.-based Forrester Research indicates that the majority of consumers who redeem prepaid vouchers already were customers of the brand or business that was offering the deal. For clothing and shoe stores, this number is as high as 80 percent, according to the report.

Meanwhile, more than half of the customers surveyed for the report, called "Myths And Truths About Daily Deals," say they would have made a purchase regardless of having the coupon voucher.

Another big issue is exactly how many people are paying attention to these deal offers, especially over email. "While Groupon vaunts the size of its 'subscriber base,' all evidence points to the medium becoming less important," says Forrester vice president and senior analyst Sucharita Mulpuru, who co-authored the report. "A significant portion of people who once subscribed to these emails no longer do, and many simply don't want to because they have no need for more clutter in their inboxes."

Last week, Groupon filed for a $700 million initial public offering, valuing shares at $20 each in its first day of trading. As of this morning, the stock was trading at $25.40, down more than two percent since the market's opening. It remains to be seen if other daily deal companies will follow suit and go public.

Mulpuru offers some advice for how daily deal sites can become better business partners for smaller merchants:

• Enable companies to decide which consumers get their offers. Mulpuru says that for all the consumer data that daily deal sites claim to collect, not enough is shared with their small-business partners.

• Allow businesses to provide more restrictions and limit redemption time periods. "Already we see some merchants providing offers that expire in a few weeks," Mulpuru says. "That makes much more sense than year-long redemption cycles which create customer service challenges for merchants."

• Pivot to new businesses. Mulpuru says we should expect to see more full-price selling, similar to what flash sale sites like Gilt Groupe has already introduced. "New products are one option, but these companies also need to take advantage of the assets they do have," she says. "For small, unknown and untested merchants, Groupon's customer file is a potentially attractive customer acquisition tool that could be a revenue opportunity in itself."

Has your business had any luck with daily deal offers? Let us know by leaving a comment below.

Jason Fell

VP, Native Content

Jason Fell is the VP of Native Content, managing the Entrepreneur Partner Studio, which creates dynamic and compelling content for our partners. He previously served as's managing editor and as the technology editor prior to that.

Editor's Pick

Related Topics

Side Hustle

Anyone Can Start a Passive Income Side Hustle For Easy Money — But Only If You Know These 5 Essential Tips First.

The rise of digital automation technology has made starting a passive income side hustle easier and more accessible than ever before.

Business News

This Company Promised to Transform Drive-Thrus With AI — But the Secret Powering Its Tech? Humans.

Presto Automation Inc., one of several major players in AI-ordering tech, has made headlines for using off-site employees in places like the Phillippines.


Don't Just Babble on LinkedIn — You Need to Carve Out Your Own Niche. Here's Why.

To ultimately unlock the full potential of your LinkedIn experience, you need to establish yourself as a thought leader in a specific niche. This is why (and how).


How to Start a 'Million Dollar' Morning Routine

Restructure your morning with a few simple steps that may help to amplify your energy.

Side Hustle

He Launched His Creative Side Hustle Out of a Garage. Now It's Worth $225 Million.

Tom Humble, CXO and founder of E.C.D. Automotive Design, followed his passion for custom auto design into big business.

Business Ideas

55 Small Business Ideas to Start in 2023

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2023.