I got a glossy flyer in the mail prompting readers to check out LiveDeal (LIVE). That's usually a bad sign; glossy mailers invite my sarcasm. I can't see how this company differentiates itself from Groupon (GRPN). They both allow retail merchants to push first-time discounts to customers. They both have search functions that instantly geolocate the first-time user. Their UIs both clarify final-offer prices, but LiveDeal specifies an expiration time to prompt that retail sense of urgency. I guess that's their differentiator.
Let's glance at the fundamentals from Yahoo Finance and Reuters. Here's LIVE first.
P/E: N/A
Profit margin: -114.42%
EPS 5yr growth: N/A
ROE 5yr growth: -84.0%
Now here's GRPN.
P/E: N/A
Profit margin: -4.73%
EPS 5yr growth: N/A
ROE 5yr growth: N/A
Both these companies have pathetic earnings histories. They have lost money since 2011 and that's as far back as I need to go. I am amazed that Groupon's market cap is 63x larger than LiveDeal's given their poor ability to generate earnings. I guess sucker investors are paying a premium for Groupon's market share in the e-coupon vertical. Groupon has 100x more revenue than LiveDeal and still can't make a profit. That tells me that any business model solely focused on channeling retail discounts is not scalable. A first-mover advantage doesn't mean jack squat in a vertical that offers no economies of scale.
I noticed that Groupon had more pics of attractive women and LiveDeal had more pics of food when I checked them out today. Those are two of my favorite subjects. This cursory glance at two sorry companies at least gave me some good visuals.
E-commerce is as crowded now as it was in the late 1990s. Another shakeout is due and the survivors will have UIs optimized for mobile displays. I don't care what either LiveDeal or Groupon look like on a mobile device because I don't need apps prompting me to urgently buy things I don't need, discount or no discount. I also suspect the ultimate winner in the e-coupon vertical will have no more than a dozen employees and a marketing effort governed entirely by BRMS rule engines that automate the sorting and matching of offers.
Full disclosure: No position in either LIVE or GRPN at this time.
Let's glance at the fundamentals from Yahoo Finance and Reuters. Here's LIVE first.
P/E: N/A
Profit margin: -114.42%
EPS 5yr growth: N/A
ROE 5yr growth: -84.0%
Now here's GRPN.
P/E: N/A
Profit margin: -4.73%
EPS 5yr growth: N/A
ROE 5yr growth: N/A
Both these companies have pathetic earnings histories. They have lost money since 2011 and that's as far back as I need to go. I am amazed that Groupon's market cap is 63x larger than LiveDeal's given their poor ability to generate earnings. I guess sucker investors are paying a premium for Groupon's market share in the e-coupon vertical. Groupon has 100x more revenue than LiveDeal and still can't make a profit. That tells me that any business model solely focused on channeling retail discounts is not scalable. A first-mover advantage doesn't mean jack squat in a vertical that offers no economies of scale.
I noticed that Groupon had more pics of attractive women and LiveDeal had more pics of food when I checked them out today. Those are two of my favorite subjects. This cursory glance at two sorry companies at least gave me some good visuals.
E-commerce is as crowded now as it was in the late 1990s. Another shakeout is due and the survivors will have UIs optimized for mobile displays. I don't care what either LiveDeal or Groupon look like on a mobile device because I don't need apps prompting me to urgently buy things I don't need, discount or no discount. I also suspect the ultimate winner in the e-coupon vertical will have no more than a dozen employees and a marketing effort governed entirely by BRMS rule engines that automate the sorting and matching of offers.
Full disclosure: No position in either LIVE or GRPN at this time.
