Can Starbucks Save Groupon?

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There's a hot daily deal going viral today.

LivingSocial is offering a $10 Starbucks Card eGift for just $5. The one-day deal is off to a blazing start: There were 679,000 vouchers sold by noon, with another dozen hours to go.

The deal may not catch up with the 1.3 millionAmazon.com (NAS: AMZN) vouchers sold early last year -- offering $20 at the leading online retailer for $10 -- but it's good to see the buzz building again for the daily deals space.


We don't really know whether Starbucks (NAS: SBUX) itself is the one behind this promotion or its terms. It's highly unlikely that Starbucks is entering into the typically 50-50 split between merchant and daily deals website provider. And it's hard to imagine Starbucks selling $10 of java for $2.50 in revenue.

Sure, summer is a seasonally slow time at Starbucks, but the company's been rolling out iced and fruity beverages to combat the summer heat with healthy comps to boot. This deal helps LivingSocial more than it does Starbucks at this point, and it's probably what Amazon.com -- which happens to own a 29% stake in LivingSocial -- thought when its deal went viral in January of last year.

Where does Groupon (NAS: GRPN) fit into this deal? Well, what's good for LivingSocial is good for the larger Groupon. Marquee deals like this are what reminded people to stay close to the daily deals website. And deals like this are what lit up social-networking websites and Twitter.

Many will argue that it was Groupon's sale of 441,000 Gap (NYS: GPS) $50 vouchers for $25 each two summers ago that put the company and the niche on the map.

Groupon could certainly use the attention; its latest quarter was horrendous. Revenue would have posted a 7% sequential decline if you backed out the company's direct revenue. Groupon shares have gone on to shed 79% of their value since going public at $20 less than a year ago.

A single daily deal -- no matter how prolific -- on a rival website may not be enough to turn Groupon's fortunes around, but it may be a much-needed reminder that daily deals websites are still bargain havens if you know how to use them.

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The article Can Starbucks Save Groupon? originally appeared on Fool.com.

The Motley Fool owns shares of Starbucks and Amazon.com. Motley Fool newsletter services have recommended buying shares of Amazon.com and Starbucks. Motley Fool newsletter services have recommended writing covered calls on Starbucks. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.Longtime Fool contributor Rick Munarriz calls them as he sees them. He does not own shares in any of the stocks in this story. Rick is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.

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