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Cape Town – Groupon South Africa will close its doors on Friday, it announced on its website.
The website that has offered discounted deals since 2010 said it “has wound down its operations in South Africa and we are unable to offer you any deals today”.
“For our customers, this means we will stop offering deals on our website from tonight,” it said. “All current vouchers bought will remain valid until the date stated on the voucher.”
Mybroadband reported on October 28 that Groupon South Africa might close, after the global entity announced it will develop a “streamlined country footprint”.
“The company has identified its go-forward country footprint to consist of 15 countries, down from 27 in the portfolio as of the second quarter 2016,” it reported Groupon as saying. “We are pursuing strategic alternatives and other options to exit the remaining countries, which we expect will continue into 2017.”
MyBroadband said a source indicated that "Groupon South Africa is likely one of the countries which will be exited".
On Friday, Groupon said “we are sorry not to be able to offer you any great deals today, but thank you for your interest in Groupon".
Customers uncomfortable with using their voucher can get a cash refund option, said Groupon.
“Goods purchased up to 4 November will be fulfilled,” it said. “Should you need to return a Goods item you purchased, please do such before 30 November.”
Groupon's model was to offer daily deals on the "best things to do, see, eat, and buy in a variety of cities across South Africa".
Tell us: Have you purchased any Groupons? How do you feel about the closure of Groupon?
However, its business model has been taking strain globally.
Its financial results for the quarter ended 30 September 2016 showed a net loss of $35.8m.
Groupon's once-bright star burns out
The global entity also announced that it was buying LivingSocial, merging the two “daily deal” titans into one business.
Groupon itself has fallen considerably from its high-flying days as the New New Thing in tech stocks, explained Bloomberg's Megan McArdle. "It went public at $28 a share. It is now trading at around $4. Its net income hovers around 0 percent, and the company announced further retrenchment around the same time it announced the LivingSocial merger."
"What happened," asked McArdle. "The short answer: Its business model was never very good."
"Coupons can basically serve two functions: price discrimination or advertising. Price discrimination is when you charge different customers different prices based on their willingness to spend money. Supermarket coupons are great for this: People who are price-sensitive enough to spend their Sunday morning combing through the coupons and clipping them out get a discount, and the people who value their time more than their money pay full freight.
"Coupon shows make a lot out of the extreme folks who manage to go to the grocery store and pay nothing for a huge cart of groceries, but if you watch those shows, you’ll see those people have to go to extreme lengths just to get enough coupons to pull this off -- badgering friends to collect their inserts, diving into dumpsters to get discarded newspapers -- and then find storage space for 30 bottles of shampoo. Most people, even couponers, won’t bother.
"Coupons can also be a sort of advertising to new customers. Think of those coupon booklets they used to give college students, or those sent to people who’d just bought a house. Those folks don’t know the local restaurants, hair salons or pest-control companies yet; a coupon essentially earns you the right to compete for them as loyal customers.
"Groupon was a little bit of both. But it didn’t do either very well."
