Here's why things are headed downwards - There are way more reasons as well, but these are the most significant:
1) Victim of its own success. Groupon, LS expanded way soon, way fast. Daily deal sites start popping around all over the place creating chaos and irritation for both the merchants and the customers (merchants bcos the same merchant gets solicited by 10 diff daily deal sites - customer bcos now you're unsure which site has the best deal and too much email)
2) The last part of (1) above can be listed as merchant and customer fatigue.
3) Its uneconomical to hire and retain salespeople in big cities like Chicago/DC etc. For this model to work, the sales team should be in a extremely low cost area. Sales team will be one of the biggest expense for such a company/startup
4) Groupon / LS are not proving effective ROI to merchants
5) Novelty factor has worn off -- making it difficult to keep customers engaged. Now, the customer is engaged only if its an awesome deal from an awesome merchant. For the remaining merchants, the purchase pattern is more driven by 'need' -- not so much impulse any more. For eg: Meh - I need to get oil change done. Might as well check on Grpn/LS to see if there's a deal being offered.
1) Victim of its own success. Groupon, LS expanded way soon, way fast. Daily deal sites start popping around all over the place creating chaos and irritation for both the merchants and the customers (merchants bcos the same merchant gets solicited by 10 diff daily deal sites - customer bcos now you're unsure which site has the best deal and too much email)
2) The last part of (1) above can be listed as merchant and customer fatigue.
3) Its uneconomical to hire and retain salespeople in big cities like Chicago/DC etc. For this model to work, the sales team should be in a extremely low cost area. Sales team will be one of the biggest expense for such a company/startup
4) Groupon / LS are not proving effective ROI to merchants
5) Novelty factor has worn off -- making it difficult to keep customers engaged. Now, the customer is engaged only if its an awesome deal from an awesome merchant. For the remaining merchants, the purchase pattern is more driven by 'need' -- not so much impulse any more. For eg: Meh - I need to get oil change done. Might as well check on Grpn/LS to see if there's a deal being offered.