Updated: Sale Ending Soon? Yelp Rethinks Its Daily Deals Service

Yelp

The rapid growth of me-too daily deal services was bound to see a turn at some point, and it looks like that moment has come. Today, it emerged that local reviews network Yelp is preparing to cut staff and “scale back” its one-year-old Yelp Deals service. The news comes days after Facebook decided to shutter its own daily deals service, and the biggest of them all, Groupon, fended off criticism of its own prospects.

According to Bloomberg, which first reported the news, about 15 sales staff currently working on the Deals service are getting redeployed to other parts of the organization. Another 15 will remain working on the service, and the number of offers sent to users is “unlikely to grow.” What’s less clear is whether the numbers will be going down at some point, too.

The reason given by Yelp for the change in strategy is that the company now wants to focus on “good” opportunities, rather than sending out more offers of “inherently declining quality.”

The decision comes somewhat abruptly: it was only at the end of June that the company took the service mobile and extended its Deals service to its iPhone and Android devices, allowing users to find and redeem the offers through Yelp’s native apps.

“Today you can find Yelp Deals in your inbox in 20 metros and counting,” wrote Eric Singley, Yelp’s director of mobile products, at the time. “How’s it going? AWESOME.”

But perhaps not awesome enough. We have contacted Yelp to ask if the mobile Deals will stick around, and will update the story as we learn more.

Daily deal bubble? The rapid growth of daily deals sites like Groupon and Living Social gave a lot of encouragement to others to launch similar services — and Yelp’s service offering local business reviews seemed to lend itself perfectly to offering deals for goods and services at those places. But the rapid rise of so many services doing pretty much the same thing as everyone else seems to have led to a deal fatigue among consumers.

Numbers from Hitwise note that since June of this year, the overall traffic going to deals sites was down by 27 percent. Groupon saw a 50 percent drop, although Living Social’s traffic was up by 25 percent. Hitwise notes that the drop in traffic could be from increased competition from more sites, but it could also be down to people feeling “overwhelmed” by too many offers.

Yelp’s news comes on the heels of another high-profile daily deals closure: last week Facebook also said it would shelve its offers service, although it would keep one aspect of it alive: the Deals that users receive when they check-in at venues offering deals via Facebook.

Meanwhile, last week Groupon’s CEO Andrew Mason sent out a long “internal” memo (that was leaked, of course) explaining why the critics are wrong and Groupon is in better shape than ever before.

Bloomberg notes that the month of July alone saw the closure of 38 daily deals sites. It notes that 36 opened, too — which means that on the whole, the number of places you can get a deal are still on the rise.

Update: Yelp’s VP of corporate communications, Vince Sollitto, sent us the following response:

“Email-distributed deals (including Mobile Deals) will continue to remain an important part of Yelp’s product offering to help small business owners’ attract new customers, along with local search and display advertising, and deals business owners can self-serve post on their Yelp profile pages. We are constantly fine-tuning how we allocate sales resources across our product line and how aggressively we expand the reach of each product.

“Yelp will also continue to focus on providing value to consumers, which includes providing deals of only the highest quality at a rate that is desirable and not distracting. Yelp continues to see strong growth in review content and unique visits, with more than 20 million reviews on the site and more than 58 million unique visitors in July. We are projecting to double our sales force over the next 12-18 months and a portion of those folks will likely source and sell emailed deals along with our other products.”

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