From Groupon to Park & Bond, the daily deals and flash-sales space has seemed like the e-market to look into recently. Even the No. 1 on Inc. 500, Ideeli, has really, really capitalized off the trend. But questions arise over the sector’s long-term sustainability with Yelp‘s steep profit loss in August, according to Yipit data.Yelp, which focuses on deals from local businesses in a number of cities, reported its revenue dropped 52 percent from July to August, seeing $529,000 fall to $253,000. Its recent high point came in March at $745,000, and in the next five months, it saw steady declines, according to Yipit.
The website reassigned half of its daily deals team in response. Not too surprisingly, Yelp CEO Jeremy Stoppelman remained upbeat in a blog post.
“It’s still a work in progress, so please give us a couple more months to take over the world,” Stoppelman wrote.
The reason behind the downward trend appears quite simple. As revenues fell, the number of offered deals decreased, too. In May, the month that saw $745,000 in revenue, Yelp had 69 deals. In August, it had just 26 deals, and, from May to August, revenue fell by 66 percent, according to Yipit.
The decrease in deals has also come as more companies move into the sector. Some have had to drop out: Facebook announced last month that it would discontinue its daily deals feature. And if Facebook can’t make a go of the market, you should really start to wonder who can.
Read more at GigaOM.