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Comment by arbuge | Hacker News Reader

Every article and comment I read on this topic seems to assert they're doing badly because they're in a business with "no barriers to entry".

Building an email list of millions of people seems like a formidable barrier to entry to me. Particularly so when the CPC cost for anything even vaguely daily-deal related has shot through the roof over the last couple of years and is in the $5-$10 range per click now. It usually takes several - several tens of clicks to convert to an email subscription, depending on landing page.

Not to mention the cost of hiring and organizing thousands of salespeople nationwide.

I don't recall precisely, but I believe that LivingSocial & Groupon are still far bigger by market share than the rest of the players put together... that's not what you get in a space where barriers to entry are low.

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This explains why Groupon & LivingSocial have roughly maintained their market shares:

http://go.bloomberg.com/tech-blog/files/2012/08/livingsocial...

I think the primary reason for their "downfall" was not lack of barriers to entry (there were none at first, but once industry is established, there are as you mentioned), but a much smaller market overall. i.e., the "group coupon" model was very popular for a short time, much more so than its long term steady-state usage.

Sure, it's hard being the first, but after Groupon became popular people started actively looking for other deal sites. It became very easy to throw up a site and gain a lot of traction. I helped one of my clients do just that and they continue to see a lot of traffic to this day.

How exactly did you get that traction? Curious as to what I'm missing... doesn't look so easy to me.

Verticals and localization. I believe there are 50 Groupon clones in Turkey alone and you can find a deal site in every single niche you can think of.

In Malaysia, there are over 80 groupon clones at some time ago.

In Russia too: everyone (and his dog) makes these sites.

I thought their biggest problem was that they do not provide any advantage to the merchants. I have read numerous articles about how the merchants greatly regretted their decision to give groupons but not one about how great it turned out for them.

The email list is the easiest part - just copy Groupon's. By the very nature of the business they publish a list of everyone they deal with. Scrape it.

This is why Groupon isn't worth much though. There are no legal, ethical, or technical reasons for not contacting everyone who uses them and offering them a better deal.

The beautiful thing about e-coupons is that they don't cost anything to issue so there's pretty much no risk to the merchant for trying another company. The only lock-in possible in this industry is customer satisfaction through value, which Groupon is notoriously bad at.

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