Daily deal companies Groupon and LivingSocial are looking for new ways to bring in money as their original business declines and they suffer financial losses, Reuters reports.
Groupon last week reported another quarter of disappointing earnings as its core business stagnated, sending its stock down 30 percent to an all-time low of $2.76. Its biggest rival, Living Social, is piling up losses, and part-owner Amazon.com earlier this month recorded a quarterly loss after writing down its Living Social investment.
Both companies are racing to diversify, venturing into more generic ecommerce areas like off-price sales through ventures such as Groupon Goods and LivingSocial’s Shop. Meanwhile, upstarts are developing new variations on the discount coupon theme.
The article describes how merchants have found that deals did not benefit the merchants opffering them as originally promised and quotes analysts who describe the business model as “unsustainable.” As technology improved, even small merchants have the ability to provide special deals and offers both to loyal customers and to prospective customers. Gift cards and prepaid loyalty programs give them a tool to provide value while limiting the risk involved.
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