In announcing the layoff of 1,100 employees recently, Groupon executive Rich Williams wrote that thanks to everyone's "great work," the company would be able to streamline and "do more with less, while still providing the high level of service our customers expect and trust."

Which customers is he talking about, exactly? The small business owners who offer deep discounts, only to lose in the bargain? The Groupon users who report feeling like second-class customers?

Groupon is trying to project the image that it's still partying like it's 2009. But to many people, the most surprising thing about the news might be that the company still exists in 2015. A media darling back when articles about saving money in hard times were in high demand, Groupon has fallen off many radars for good reason. After the initial flurry of interest about its original approach and entertaining pitches, the focus shifted to criticism of its business model.

Now a big problem for Groupon is that its business model has been adapted and improved upon by its competition. There are much better options out there that include advertising partnerships and packages. The daily deal becomes a better deal for small businesses when it comes with strong local advertising. These days a business can offer a discount on Friday but have it promoted on the radio all week. If I wanted to attract customers with a "deal of the day," that's what I'd try.

Operating a small business is already a daily struggle--it's hand-to-mouth much of the time--without being sold on trading your profits for discounts. Groupon takes advantage of small business owners by persuading them that a daily deal will help build regular clientele. But those deals rarely create the repeat customers that make or break a business. They simply attract people looking for drastic markdowns, and you can't build a business by essentially giving things away to one-time-only customers.

So now Groupon has announced that it's leaving countries like Morocco, Panama, Thailand and Uruguay, where small businesses face even more of a struggle than in America. They're admitting their efforts in those places didn't give them their desired return on investment. Of course it's sad when people lose their jobs, but those 1,100 laid-off Groupon employees are undoubtedly ambitious and energetic; I'm sure they won't be unemployed for long.

And those countries and the others that Groupon has recently pulled out of, especially Turkey and Greece, are better off without it. They have enough problems of their own already.

Published on: Oct 9, 2015
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