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If you’re Groupon, once is not enough.
The company’s stock took a hit yesterday after a survey found that more than half its merchants weren’t planning to do repeat business with the daily-deals site. Groupon fell 6.59 percent to close at $19.27 — below its IPO price of $20 in November.
A survey of 400 merchants about their experiences with Groupon, LivingSocial and similar sites found that 52 percent were not planning to run a daily deal in the next six months.
Also, 24 percent of the merchants only planned to run one deal in the next six months, acccording to the survey by Susquehanna Financial Group and Yipit.
While the report also found that 8 out of 10 merchants who ran a daily deal were satisfied with the results, it suggested that Groupon and others will have to attract a steady stream of new merchants rather than rely on repeat customers. That speaks to one of the main concerns with daily deals companies, which have to pay for a deep and aggressive sales staff to keep fueling the market.
However, there seems to be plenty of merchants to draw from before the well runs dry. In its latest financial filing for the third quarter, Groupon said it had a backlog of 49,000 new merchants who were waiting to run their first deals. Groupon runs only one deal in each market daily.
Merchant sentiment is a touchy subject for Groupon. In fact, CEO Andrew Mason’s first public comments after the company’s IPO were in defense of Groupon’s merchant relations.
The company has been accused of coercing businesses to basically give away goods and services while it takes its up to 50 percent cut.
“The anecdotes that get picked up in the press are examples of ‘plane crashes’ just being more interesting and more media-worthy stories than the safe landing,” Mason said.
A New York City merchant, Ruben Sadykov of Casa Organic Dry Cleaners, said his first offer through Groupon has been a success.
“I will be able to run a Groupon or Living Social deal twice or three times a year and not have a problem,” Sadykov said.