Groupon Cedes Share of Daily Deals to LivingSocial, Yipit Says
Groupon's share of online daily deals slipped to 48% in May, from 52% in April, as rivals including LivingSocial closed in on its market lead — (Bloomberg) — Groupon Inc.'s share of online daily deals slipped to 48 percent …
Context & Ripple Effects
This is the second consecutive monthly data point from Yipit showing Groupon losing ground: back in March the tracker already had Groupon down another 32% with LivingSocial tied up with it, and the April-to-May slip from 52% to 48% confirms the trend rather than marking a one-month dip. The timing compounds the pressure — Groupon is on the cusp of an IPO, and this share data lands squarely in its pre-offering window.
The slide also feeds an active debate about the business itself: critics have called Groupon's heavy spending to acquire customers and merchants unsustainable, with some invoking the Ponzi comparison, while a bull-case analyst pegged the company at $25 billion on the strength of its dual-sided network effect. A shrinking share number is direct ammunition for the skeptics.
First-order effects
- Groupon heads into its IPO marketing with a headline metric moving the wrong way — a majority share of US daily deals in April became 48% in May by Yipit's count, undercutting the 'dominant leader' framing its bankers would prefer.
- LivingSocial gains a concrete proof point for its pitch to both merchants and investors that the market has two viable platforms, not one.
Second-order effects
- Merchants running daily deals now have credible competition for their inventory, which should improve terms — revenue splits, exclusivity demands, and promotional placement all get renegotiated as Groupon can no longer assume it is the only game in town.
- Other trackers and rivals will be pushed to publish competing market-share numbers ahead of the Groupon offering, since whoever defines the metric shapes the IPO narrative.
Third-order effects
- If share keeps eroding while customer-acquisition spending stays high, the network-effect thesis behind the $25 billion valuation comes into question — the daily-deals model may prove easy to replicate locally, pushing the category toward consolidation or margin compression.
- Sustained multi-player competition points toward daily deals becoming a marketing channel merchants rotate through rather than a winner-take-all platform, which would reshape how any player in the space is valued.
The trend: Daily deals is shifting from a Groupon-dominated land grab to a contested two-player market, with independent tracker data increasingly setting the valuation debate ahead of Groupon's IPO.