Last week we released an infographic at the GeoLoco conference in San Francisco. The data from Yipit shows that the growth of Groupon Now! has stalled. Since its launch five months ago, the average weekly growth rate has gone from 37% in June to an average weekly growth rate in September of 6%, with the rate down to 2% in the last week of September.
The actual revenue generated in September from Groupon Now! was just 0.7 percent less than one percent of its overall revenue with just $74,000 generated in New York and $37,000 in San Francisco representing 1.3 percent and 1.1 percent respectively of overall Groupon revenue in those cities.
We believe the data points to a significant challenge with the Groupon Now! model when it comes to winning over consumers.
Groupon Now! has seen the strongest adoption for spontaneous purchases such as restaurants where the average price per deal is $8 compared to much higher involvement purchases such as medical and dental care. However, with merchants on average making just $171 from Groupon Now! per month versus $22,722 for Groupon and with discounts bigger on Groupon than Groupon Now!, the merchant and consumer incentive isn’t there to drive high adoption rates.
For years, people have promoted the holy grail of marketing as the ability to offer relevant deals based on people’s location, but even with Groupon’s huge sales and distribution infrastructure its geo-targeted product has failed to ignite consumer interest.
Perhaps the biggest obstacle for the consumer adoption of Groupon Now! is that it is still a “pull” product so it is reliant on the consumer going to search for a deal within their vicinity. If Groupon can find a way to push hyper local, unobtrusive, relevant and timely deals to consumers it might succeed with Groupon Now! The challenge for Groupon is that businesses and brands can increasingly use a number of platforms to do just that.