Google Offers: Falling to Groupon Already?

google-offers-tagsAs industry-leading Groupon continues to pick up steam, Google Offers, the company’s attempt to enter the daily deals scene, is already seeing a decline in revenues. This despite 9 percent revenue growth in the North American daily deal industry.

Offers revenue declined by 23 percent in August despite expanding to new regions and winning over more local business owners, according to Yipit data obtained by Reuters. The reason seems to be a lack of interest: the number of vouchers purchased per deal dropped by 46 percent.

Offers launched three months ago in select regions (New York, the Bay Area, and Portland). Last week, Offers expanded to Austin, Boston, Washington, D.C., Denver, and Seattle.

Meanwhile, Google is still offering vouchers with a much lower selling price than lead competitors Groupon and Living Social, despite an 18 percent increase in Google’s average voucher cost. That means less incentive for business owners, and despite the lower costs, users still aren’t biting.

So can Google break into the daily deals scene? It’s certainly too early to rule them out, but the slow launch isn’t working; what is supposed to be a service gaining momentum like a snowball rolling down a hill is instead petering out just three months in. Perhaps lower revenues is one reason why Google was advertising Offers on its home page recently.

More importantly, Groupon is becoming an fearsome opponent. In August, Groupon saw a 13 percent increase in revenue and rose to 53 percent in market share, a 2 percent increase. It seems that many companies are simply stepping out of the way as Groupon becomes the practical monopoly. Facebook has closed their own attempt at daily deals while Yelp has cut back dramatically.