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Groupon Loses Market Share as Online Daily Deals Decline

At Groupon Inc. (GRPN), daily deals are fading. That’s the message the company sent many investors this week when it reported a decline in gross billings, or the total value of goods and services bought on its site, between the first and second quarters of this year.

While demand for online coupons may be cooling off, competition is rising, Bloomberg.com’s Tech Blog reported. Groupon’s market share in North America shrank to 53 percent in the second quarter, down from 56 percent the previous three month period, according a report from daily-deal aggregator Yipit. Meanwhile, LivingSocial Inc. grew its share to 22 percent, up from 20 percent.

“This was the first sizable shift backwards in well over a year,” for Chicago-based Groupon, said Unaiz Kabani, product manager for New York-based Yipit.

In North America, Groupon’s gross billings from daily deals fell 2 percent in the period, Kabani said, while LivingSocial grew 15 percent.

Paul Taaffe, a spokesman for Groupon, and Brendan Lewis, a spokesman for LivingSocial, declined to comment.

Like Groupon, LivingSocial is looking to expand beyond daily deals. Last month, the Washington-based company announced LivingSocial Shop, an e-commerce store for discounted furniture, clothing and other goods. The site mirrors Groupon Goods, a shopping site started last year that accounted for most of Groupon’s sales growth in North America in the second quarter.

Travelzoo Inc. (TZOO) increased its market share to 3 percent, according to Yipit. AmazonLocal, a partnership between LivingSocial and Amazon.com Inc. (AMZN), kept its 2 percent share.

To contact the reporter on this story: Douglas MacMillan in San Francisco at dmacmillan3@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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