Hearne: Rise & Fall of Daily Deals, Groupon, KC Star ‘Dealsaver’ & Muncharoo Bails

Not since Ponzi Schemes became epidemic in the early ’80s has a business fad risen and fallen so dramatically…

First allow me to say on behalf of Comments Section naysayers, "They told me so."

However when the force to be reckoned with known as Groupon took Kansas City and the nation by storm barely three years back, it was almost magical. As I recall, Groupon had maybe 50,000 people on its email list early on, then grew rapidly to 100,000, then 350,000. And last time I checked, Groupon was thought to have upwards of three-quarters of a million Kansas City subscibers.

In a city of two million, a fourth of whom supposedly do not have broadband, that’s a bunch.

There followed by an onslaught of Groupon wannabes ranging from Lucky Monkey to Muncharoo to the Kansas City Star‘s Dealsaver.

Speaking of Muncharoo – a locally-based Web wheeler dealer with possibly the worst name in the biz – a two week old rumor that it had been bought out by Florida-based CrowdSavings was confirmed last week. The deal reportedly put somewhere around $500,000 in the pocket of founder Eric Vianello who did not return a call on the matter.

And while half a mill may sound like peanuts in the world of high dollar e-deals, it’s a pretty penny when what it boils down to is buying an email list of 60,000 subscribers and change.

Then again, why sell out in the first place if you’re making money hand over fist?

Exactly my point.

The lack of light at the end of the daily deal tunnel reared its ugly head in January on 60 Minutes.

That’s when the show noted that Groupon had yet to make a profit and, unlike other "high tech" companies, was saddled with extremely high overhead in the form of the staffers required to market its daily deals.

Oh and one more thing…

That Groupon, while at the forefront of the daily deal biz, was being besieged by competition from anyone and everyone – local TV and radio stations, newspapers like the Star, alternative weeklies like the Pitch and entreprenuers like Vianello.

Meanwhile, Groupon’s stock has fallen more than 50 percent from its initial public offering price. No wonder Vianello opted out.

One need look no further than the Star‘s Dealsaver for the answer. Locals appear to be growing weary of the daily bombardment of "bargains" for cheap haircuts, cheap eats, cheap this and cheap that.

When’s the last time you took a good, hard look at your ValPak mailing?

And check out some of the Star’s current Dealersaver action.

A Lee’s Summit carwash is at only 286 deals sold on a $12.50 to get $25 car wash coupon. A Liberty fireworks stand has sold 77 deals @ $10. The UPS Store in Oak Park Commons has 30 deals sold. The Jumping Jax play area in Joco has 58. Tina Marie’s Bakery in Shawnee 93.

Get the picture?

That’s not exactly what one would call "minting money."

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9 Responses to Hearne: Rise & Fall of Daily Deals, Groupon, KC Star ‘Dealsaver’ & Muncharoo Bails

  1. harley says:

    bad business moves
    I think groupon had a deal to sell for billions and passed on it. Too bad.
    I saw a groupon recently for hereford house and it sold 1000 for half price dinners there.
    I thought that should really “burn” down the house and piss off the waiters and waitresses.
    Saw makers mark have half price steaks one night a week. NO problem.
    Businesses want and need new customers. I’m sure hereford house can convert tghose
    people into regular customers but it takes lots of work and patience on the part
    of those employees to keep customers coming back.
    Yes…the luster may have faded…but there are still a few good deals.
    I think people still want to buy the deals but more and more merchants realized the
    financial side was against them making money so they turned against the deal programs.

  2. mike says:

    People are busy and often don’t like the inconvenience. Back when there were stay at home moms, coupons, s@h greenstamps, etc. were popular. Almost all grocers did double or triple coupons. People used to have time to collect and organize coupons. Now with everybody working outside the home, few bother with it. Another thing that is even more unpopular are mail in rebates. Retailers often advertise a price that is “after rebate” in smaller print. The people that set up advertisements in that manner seem to be clueless to the bad will they cause. Most people I know just want a good price without having to jump through hoops to get it.

  3. Alamo says:

    I understand The Star is going to offer a coupon to Alamo. That’ll be worth a post I’m sure

  4. Super Dave says:

    Mike has a point I like and want to add to it all the places who give you a discount if you use their little member card damn things. Like Price Choppers free gas deal. Nothing is free and if you buy a bunch of stuff there because you think you are saving at the Quick Trip pump you best wake up because you are paying for that gimmick all the way and have saved nothing.

    Places just need to sell the shit for what it’s worth and stop fucking with people trying to get them to believe they are really getting something. Wanna sell it cheap? Well then place an ad saying it’s on sale this week and be done with it.

    The general public I guess is clueless to what things would really cost us if all the advertising costs was taken off the price we pay for things.

  5. smartman says:

    Too Munch Information
    Muncharoo was worth about 500,000 pesos. If Crowd Savings paid half a mil , in real US dollars for it, they are some seriously stupid motherfuckers. As business models I’ve never bought into the myth of Groupon or Facebook. The fact that someone can create 5-7-10 year revenue pro formas that pass muster with anyone that took an accounting or business class is testament to how stupid we’ve become. Kinda like Kanrocksas.

  6. Rick says:

    What i want to know
    is why you didn’t do a story on the Star fumble in sunday’s paper? A one page ad for the new Target opening……in UTAH!!!!

  7. Hearne says:

    Target in Utah, huh?
    Guess I’m not a very good reader of ads. Not sure what the story would be though, other than one or more people really effed up.

    As for coupons and rebates, I’ve actually done the coupon thing but the time and effort was too much. And I hate rebates. I almost never get around to filling them out and sending them in.

  8. Rick says:

    Sunday paper
    Sunday paper page three. Full page ad about the new Target including, if my memory serves me right, directions to the store. Grand opening. I’m thinking I don’t know any of these street names and then realize its in Utah. Even then I was giving the Star the benefit thinking maybe its a national ad celebrating this grand opening. But nope it was clear a local ad that somehow managed to end up in the Star. Major screw up indeed.

  9. bschloz says:

    Advertising
    Groupon ,DealSaver, Val-Pak all doing fine.
    Groupon really is a marvouleus business model.
    Just another tool for local and national advertisers.
    GRPN at $10 has a valuation of $6 billion about what Google offered them.
    No muncharoo or local can build that infrastructure of maintianing a list. These guys will do $3 billion in sales next year.
    They can skew margins by category ,size etc etc…. — Handling money has been there biggest problem.

    Hearne, have you seen the USPS new Every Door Direct Mail– This is ground breaking program from the Post Office.
    Of course the Post Office is the most powerful advertising network on earth. Now available to Mom and Pop biz ..no lists no middlemen.

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