Yipit: Groupon Merchants Happier, Offering More Repeat Deals

Deal aggregator and data provider Yipit says that Groupon is growing by offering more deals from the same merchants rather than adding large volumes of new merchants. Compared with roughly a year ago, Groupon has offered 12% more deals but only grown its merchant base 4% according to Yipit data.

This strongly implies higher merchant satisfaction with Groupon. Yipit also says that repeat merchant deals also perform better.

The percentage of repeating merchants has grown relative to new business. It now stands at 41%.

This growing segment (41%) of repeat merchants generated an even higher “48% of company’s gross billings during the quarter.” What’s more striking, says Yipit, is that in the context of deals (removing Travel, Goods) repeat merchants are generating a majority of Groupon’s local gross billings, “increasing from just 33% in Q3 2011 to 56% in Q1 2012.”

The Yipit data also show repeat merchant deals perform about 21% better than new business deals. It’s not immediately clear why except that past experience may yield better deals (as well as better fulfillment).

All this would appear to be good news for Groupon. However Groupon will still need to grow its merchant base and/or the range of services offered to merchants (which is happening) to increase revenues.

It’s not clear from the Yipit data, however, what if any impact Groupon Rewards has had on merchant retention and satisfaction. The beta program was recently opened up nationwide. Groupon Rewards require customers to spend more money, thus typically requiring multiple visits.

Update: Deal analytics company Copilot argued in an email to me that these data are more a reflection of the needs of and challenges facing the Groupon sales force than improvements in merchant retention and satisfaction. They also argue a recent Yale study that found declining deal quality also reflects declining merchant quality.

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