Count me among the Groupon skeptics. The business is losing money and failing to attract repeat customers, while Google
Or at least, that's how it was. Late last week, Facebook officially ended a four-month trial of a would-be Groupon competitor called Deals. "We've learned a lot from our test, and we'll continue to evaluate how to best serve local businesses," the social network said in a statement emailed to Reuters.
Some will be tempted to look at this with relief, as if Groupon and LivingSocial have a lot less to worry about. I suppose that's true to some extent. But let's also not kid ourselves; both of these companies face hundreds of local competitors. HomeRun and Denver Daily Deals send my family offers all the time.
Nor is the model unique. Groupon's travel deals service isn't materially different or better than what Travelzoo
From where I sit, backing is the only reason Groupon or LivingSocial are still considered relevant. Big-name venture capitalists Accel Partners and Kleiner Perkins Caulfield and Byers have joined with big fund operators Fidelity and T. Rowe Price in funding Groupon, while Amazon.com
Alas, these are early investors. If Groupon and LivingSocial go public as expected, VCs and corporate backers will rake in millions (billions?) pushing junk stock to unwitting common investors who may never see a dime of profit.
Too harsh? Perhaps, but to me Groupon is salesforce.com
In this sense, neither Groupon nor LivingSocial possesses the sort of brand power that allows other commodity operators to thrive. Rackspace Hosting
Facebook is out of the group buying business. Good for you, Groupon. Live it up, LivingSocial. Take a breath and then get back to work. Your businesses aren't any better-positioned than they were a month ago.
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Fool contributor Tim Beyers is a member of the Motley Fool Rule Breakers stock-picking team. He owned shares of Google at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Google+ or Twitter, where he goes by @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.