Call it group coupon overload.
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These days it is nearly impossible to browse Facebook, accept an Evite or read a local news website without being tempted to get a massage for 70 percent off, a dozen cupcakes at half price or a skydiving lesson for one-third the usual cost.
The culprit? A barrage of companies aiming to piggyback on the fast-growing success of the granddaddy of daily coupon offers: Groupon.
Groupon already faces competition from rival Living Social, which has won backing from Internet retailing giant Amazon.com. Social networking giant Facebook recently launched a daily deals program in five markets, and search giant Google — widely rumored to have tried buying Groupon — is testing its own Google Offers in a few markets.
Groupon itself has ambitious expansion plans and is preparing to raise money through an initial public offering that would value the company at $15 billion to $25 billion, according to Bloomberg.
“(There’s) no question that there is overload,” said Utpal Dholakia, associate professor of marketing at Rice University, who compares the current rash of group coupon startups to the early days of the dot-com boom of the 1990s.
Like the companies born in the dot-com boom years, most of these couponing startups are likely to eventually go bust, experts say.
“There will be a shakeout, and eventually there’s going to be just a handful of players,” said Jeffrey Grau, principal analyst at eMarketer, an Internet marketing research firm.
One problem facing these companies is that few consumers have actually tried daily deal-type coupons, so it is unclear just how big the market can get.
A poll released last month by Harris Interactive, conducted on behalf of the American Institute of Certified Public Accountants, found that only 10 percent of those surveyed had purchased a group coupon in the past year.
But it cannot possibly be for lack of opportunity. Consumers are barraged by daily by offers for deals, which typically offer a substantial discount on a product or service for a very short period of time.
In addition to the big operators like Groupon, which offers deals in 500 markets in 44 countries, the market is teeming with smaller, niche players, ranging from local newspapers to the restaurant booking service Open Table.
The field has become so crowded that deal aggregator sites make a business out of compiling and curating what they consider to be the day’s top deals from the many operators.
Just deciding where your loyalties are — let alone what you want to buy — can seem like too much.
“There’s only so many sites that a consumer is willing to go to — even the bargain-hunting consumer,” Grau said.
For now at least, it appears the deals mainly appeal to a narrow demographic.
Groupon says its users are primarily women, and primarily 18 to 34 years old. About half are single. Living Social says 70 percent of its users are women, and 51 percent are under 35 years old.
“On the consumer side, there is still a lot of room to grow,” Dholakia said.
The coupon companies also need to make sure they continue to find compelling reasons for existing customers to come back. Grau said many users consider the group coupon experience almost a game, and they like the idea of spending a relatively small amount of money on something they wouldn’t normally buy — such as a chance to go skydiving.
“If you’re really looking to fill out your shopping list, you’re not going to Groupon,” he said.
As time goes on, Dholakia said some consumers might become pickier — especially if they find they don’t actually use that cooking class coupon, or they try skydiving but don't like it. Others may become more interested in practical deals to save money on groceries, apparel or other everyday items.
Maire Griffin, spokeswoman for Living Social, said she thinks history has shown that consumers are always interested in trying something new, and she doesn’t expect that to change.
“I don’t think at any point in time there is going to be a time when a consumer doesn’t want to do something interesting,” Griffin said. “I think right now we’ve got that nice balance … of the traditional activities like a restaurant and really aspirational things like sky dives.”
Griffin said Living Social is already doing things to try to attract a broader audience. In addition to daily deals, it also offers deals geared toward families, travel and group outings like a ski trip. It also has announced hyperlocal deals geared toward neighborhoods in big cities such as New York and Washington, D.C.
“All the offerings that we’re giving folks are attractive to a number of different kinds of people,” she said.
In another sign of where the market is moving, Groupon announced Monday it is teaming up with Live Nation to form Groupon Live, which will offer discount tickets for concerts and entertainment.
Grau expects that as the group coupon model matures, more companies will offer deals targeted to specific neighborhoods or narrow groups of users, such as runners or kayakers.
He sees similarities between the excitement about group couponing and the original excitement around Internet auction sites, led by eBay. Over the years, he noted, some shoppers started to tire of the auction method, and the eBay started offering more fixed price items.
“Some of the novelty of this is wearing off, too, and so what it means is that the group buying sites will evolve,” Grau said.
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