Traffic to leading daily deal sites Groupon and LivingSocial has fallen often a cliff in the last few months, according to data from Compete.
Since June, unique visitors to Groupon have fallen more than 50% from 33.7 million to 15.8 million. In the same period, LivingSocial’s unique visitors have fallen from 14.7 million to 7 million. Just in the last month, Groupon visitors are down 28%. LivingSocial’s visitors were down 32% in the last month.
LivingSocial spokesman Andrew Weinstein responded, “There are a lot of competing and contradictory estimates out there, but they should all be treated with deep skepticism, as none are based on our actual numbers.” Groupon did not respond to a request for comment.
Although Web metrics generally vary depending on the source of the data, I’m comfortable using comparisons from within the same data source for relative changes. The magnitude of the drops indicate that this isn’t a statistical anomaly. This also comes during a period when LivingSocial ran an expensive publicity stunt with Whole Foods to drum up user interest.
I asked Compete about any methodology changes during that time that could have resulted in the large drop. I have not yet received a response. However, during the same period, Amazon was up 4%, eBay was up 3% and Google was up 5%.
Compete’s data are based on a panel of 2 million people in the United States. According to Groupon’s S-1, its North America segment accounted for 42% of revenue for the six months ending in June.
Groupon’s management has repeatedly claimed that prospective investors should ignore the company’s high customer acquisition costs because once they acquire a customer, that customer will keep coming back and can be marketed to again at no cost.
These data suggest otherwise.
I’ve argued repeatedly that Groupon should disclose email open rates in its S-1. The Compete data says that traffic is falling rapidly.
Given that email is a core part of Groupon’s business, if Groupon knows that people aren’t opening its messages, that is material information that investors deserve to know.