Business

Groupon under pressure

Groupon can’t win.

The daily deals upstart, run by founder Andrew Mason, lost two major rivals in the past week. Yelp said yesterday it was scaling back its service, just days after Facebook dropped its deals initiative.

But rather than scoring it a victory, Groupon skeptics said their retreat does not bode well for the space as a whole. Critics say Groupon is vulnerable to any tech company with an e-mail list, and they have often cited Facebook and Yelp as prime examples of companies that could topple it.

However, Facebook and Yelp’s forays into daily deals were short lived, with Yelp cutting back its service after a year. It took only four months for Facebook to pull the plug.

Rather than vindicating Groupon, the defeats suggest daily deal overload is already taking its toll, some analysts said.

Yelp said it was hard to cut through the noise of all the deals filling e-mail inboxes, and merchants have complained about constant deals pitches they are receiving.

“I think the biggest takeaway is how bad the business is in general,” Forrester Research analyst Sucharita Mulpuru wrote in an e-mail to The Post.

“There just aren’t enough good merchants willing to give their products away to support all these players,” she said. “There aren’t even enough of those merchants to support Groupon’s business.”

Groupon has had a rocky run since filing for an initial public offering in June. The Securities and Exchange Commission forced the company to abandon a non-traditional accounting measure that promoted a positive cash flow despite actual losses.

Groupon has spent big to grow, running up losses of more than $200 million in the first six months of the year. Still, it’s the fastest growing company of all time, and looks to reach between $2 billion and $3 billion in sales it splits with merchants this year.

New Experian Hitwise data showed that traffic to daily deals sites was down, including 50 percent at Groupon since July.

gsloane@nypost.com