Yelp Reduces Daily-Deal Service Just Days after Facebook Announces It Will Eliminate Similar Offering

By Ed Silverstein August 31, 2011

Two would-be rivals to Groupon are finding daily deals is not the right market for them. Yelp announced this week it will reduce sales staff in half for Yelp Deals and reassign the staff elsewhere.

Yelp Deals will still be offered – after a year in the sector – but businesses will “submit their own deals,” according to a report from The Washington Post. Yelp gathers local business reviews.

The news comes after Facebook announced on Monday was eliminating Facebook Deals, with only four months of testing of the daily deals product. Facebook was testing its service in Texas, California and Georgia, The Post said.

Bloomberg News also reported that 44 percent of customers use at least one daily deals service, The Post said. But many customers appear “overwhelmed” by the number of e-mails, Bloomberg said.

The Post predicted “a handful of industry leaders will rise to the top, while smaller or niche efforts fade away” from the daily deals sector. So far, Google is still taking part in daily deals. Bloomberg reported that during July, 38 daily-deal sites closed. Groupon and LivingSocial remain the top sites for daily deals, Bloomberg said.

Groupon CEO Andrew Mason said in a memo to employees that Yelp was “small and not growing,” All Things D reports. Mason added in the memo that “it’s kind of hard to build a Groupon … and our scale creates competitive advantages that even the largest technology companies are having trouble penetrating.”

Even Living Social’s U.S. local business is about one third the size (in terms of revenues) compared to Groupon, Mason claims.

Earlier this year, Groupon launched something called “Groupon Now.” TechZone360 said it is a locally focused mobile deal service. The service let users locate deals that are close to where they are located and are currently valid.

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Ed Silverstein is a TechZone360 contributor. To read more of his articles, please visit his columnist page.

Edited by Jennifer Russell

TechZone360 Contributor

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