Most people who purchase a voucher from Groupon or other
daily deal site never return to the business after their initial visit,
according to a Rice University research study on the group deal phenomenon released June 16.

The study found that only 35.9 percent of daily deal users spend
beyond the deal’s value, while only 19.9 percent return for a full-price
purchase. In addition, 21.7 percent of deal buyers never redeem the vouchers
they paid for.

Most businesses reported mixed results from their deals. While 55.5 percent of businesses reported
making money on their promotion, 26.6 percent lost money, and 17.9 percent
broke even on their promotions.

In addition, 48.1 percent of businesses indicated they would
run another daily deal promotion, 19.8 percent said they would not, and 32.1
percent said they were uncertain.

In January, JCK
examined jewelers
that use Groupon. The company, which is currently in a “quiet period”
preceding its IPO, has said that the coupons should be looked at as a
“marketing expense” and not as a direct contributor to profits.

According to a recent filing
with the SEC, Groupon, the largest of the daily deal sites, has 83 million subscribers
across 43 countries. To date, it has sold more than 70 million Groupons.

Groupon rival LivingSocial did not respond to a request for comment from JCK.

The study, “How Businesses Fare with Daily Deals: A Multi-site Analysis of Groupon, LivingSocial, OpenTable, Travelzoo and BuyWithMe Promotions,” by Utpal Dholakia, associate professor of management at Rice University’s Jones Graduate School of Business, examined 324 businesses that conducted a daily deal promotion between August 2009 and March 2011.

“The major take-away from the study is that not enough
businesses are coming back to daily deals to make the industry sustainable in
the long run,” Dholakia said in a statement. “And our results from
three studies and close to 500 businesses surveyed show that the deals are
nowhere close to the rates of financial success for participating businesses
that some companies claim to be having.”

JCK