GROUPONS

GROUPON and its cousins are the deal-of-the-day websites that offer a variety of goods and services at discounted prices, typically at half price. I subscribe to several, or at least I did, because I just unsubscribed from most. The sites said they were sorry to see me go and would welcome me back any time. I've kept GROUPON for now, but my enthusiasm has waned. I am clearly not alone; I noticed that GROUPON's stock price has steadily declined over the last year from around $20 a share to $4.50. Some would not be surprised if it declined further.

I see many reasons from my personal experience to account for the steady decline. Mostly I have used the site to get restaurant and food bargains. The goods and trips never really appealed to me, although my wife and I had a fine time at a discounted Hilton hotel in Princeton, NJ as part of a weekend bike trip. With food, I successfully avoided all of the fattening choices that regularly appear. However, I was introduced to an excellent take-out pasta store in Greenwich Village that now has a regular customer in me. Attracting new repeat customers is obviously a business' objective in using GROUPON.

As I said, my main reason for participating was to get bargain deals on restaurants. For several months, we did manage to get some good deals. Some of these places were new; others were places we would have gone to anyway. In general, there were only a few restaurants that we would consider good enough to revisit at full price. YELP reviewers often echoed the same sentiment: it was OK, but not something we'd be willing to pay full price for.

The economics simply don't work for many restaurants. GROUPON retains half of the discounted payment, so the restaurant owner is effectively serving meals at 75% off. Many dine at bargain prices, never intending to return. The result over time is that a greater number of unattractive places seem to be appearing, judging from YELP reviews. In one case, a Peruvian restaurant in Manhattan was so egregious-- giving GROUPON customers smaller plates and limiting choices-- that GROUPON gave me a full refund when I complained.

Another trend is GROUPON's steady migration to offerings exclusively for women. I don't mind, but as a male I'm not going to want many pedicures. I intend to use up my remaining backlog of GROUPON coupons soon.