The daily deals market looks bleak

It's been a grim few months for Groupon and LivingSocial, the leading companies in the troubled daily deals field.

NEW YORK (CNNMoney) -- It's been a winter of discontent in the daily deals space, with serious issues afoot at kingpins Groupon and LivingSocial.

Financial analysts have long criticized the daily deals field for its low barrier to entry and unproven long-term viability. A recent string of bad news for the top two companies in the space has only given them more fodder.

"The field is going through some growing pains," says Unaiz Kabani, data product manager at Yipit, a research firm that tracks the daily deals space.

The season's unhappy tidings began in late October, when Amazon (AMZN, Fortune 500) reported a worse-than-expected loss due in part to its investment in LivingSocial. Amazon lost a whopping $169 million on its $175 million buy-in.

Bad news hit LivingSocial more directly on Thursday, when the company announced layoffs of 400 employees, or 10% of its global workforce. The majority of the layoffs were in the sales, editorial and customer service departments.

Meanwhile, daily deals leader Groupon suffered through its own terrible earnings report. Groupon (GRPN) shares lost nearly a third of their value earlier this month, after the company reported that its third-quarter revenue growth slowed sharply. It was a plunge Groupon's stock could ill afford, bringing it well under $3 -- a shocking 89% below its IPO price just one year prior.

The stock slump led to rumors this week that Groupon's board is itching to oust company founder and CEO Andrew Mason, who did little to dispel the reports.

"Our stock is down 80% [year-to-date] ... it would be weird for the board not to be asking that question," Mason said at a conference on Wednesday.

It remains to be seen whether Mason can turn it all around and keep his job, but the success of Groupon and LivingSocial are critical to the deals field. Groupon currently holds 50% to 55% of the industry's market share, followed by LivingSocial with 20% to 25%, according to Yipit data.

Yipit used to track the dozens of monthly entries and exits into the daily deals field, but the company stopped that practice last year when the space began to thin out.

"In the long tail there might be sites going in and out, but not the levels from before," says Kabani, the data manager. "A lot of it is people realizing how expensive it is to enter and to do well. It's easy to make a website, but not so easy to get people to visit it."

Related story: LivingSocial: Things are going to get worse

After Groupon and LivingSocial, market share drops off precipitously. The list of who follows them fluctuates a bit, but Travelzoo, Google (GOOG, Fortune 500) Offers and AmazonLocal (AMZN, Fortune 500) usually round out the top five, according to Yipit. They usually hold only 5% to 10% of the market each at any given time.

Still, Yipit thinks there's room for more than one daily deals leader.

"Groupon has headed more into selling actual goods, while LivingSocial has been focusing more on local, like live events and concerts," Kabani says. "They'll all continue to overlap, but you'll see some specialization, too."

First Published: November 30, 2012: 11:39 AM ET

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7 apps for holiday deals

With stores opening up earlier for Black Friday this year -- many on Thanksgiving day -- you can expect long lines and a rush for the good deals. Major retailers like Wal-Mart (WMT, Fortune 500) and Target (TGT, Fortune 500) are offering up interactive maps inside their iPhone and Android apps to help shoppers navigate the swarm.

Wal-Mart's smartphone app, upgraded on Monday, now lets users view the layout of their local stores, find a specific item, and pull up pricing details. Interactive store maps are also available on the company's website as well as local Wal-Mart Facebook pages.

Target's app is similar, displaying a map of your local store's various departments. It's also got a short-cut feature for busy shoppers: For the retailer's top 20 toys, shoppers can scan the item's QR code and purchase it directly from their mobile phone. The goodies will be shipped free anywhere in the U.S.

NEXT: RedLaser

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At Toys R Us, deals first, turkey later

For 7-year-old Savannah Finnerty, eyeing a toy microwave at Toys R Us in New York's Times Square was a cool way to spend Thanksgiving night.

NEW YORK (CNNMoney) -- Shop, eat turkey, then shop some more.

That was the game plan for many of the experienced Black Friday shoppers in line at Toys R Us in Times Square, after the store moved its holiday doorbusters up to the earliest time ever -- 8 p.m. on Thanksgiving Day.

"It's like a religion," said Danielle Crews, 30, who has shopped every Black Friday for the past five years. She waited in line at Toys R Us starting at 6 p.m. Thursday, then planned to make a pit-stop at home for a late evening dinner before heading out to Urban Outfitters, H&M and FootLocker.

"I'll squeeze in Thanksgiving, but then I probably won't get home again until 12 noon tomorrow."

At Toys R Us, the deals started with more than 200 doorbusters, including a $20 store gift card and $30 iTunes card with the purchase of an Apple (AAPL, Fortune 500)iPod touch.

Electronics like the Nintendo WiiU and a "buy one, get one for $1" deal on video games were some of the hot items that lured many of the early customers to the store.

"We called ahead to scope out how long the lines were," said Jeremy Gervais, a 24-year-old New Yorker, who planned to head straight to the electronics section for a doorbuster deal offering a free Air Flo Controller with the purchase of a Sony PS3 gaming console.

He had lined up four hours early to get the bundle.

Meanwhile, Heather Singleton, 34, also lined up early to get the WiiU, not to give as a gift -- but to sell on eBay.

"I heard it's really popular this year. We'll decide later if we want to keep it or sell it to pay for our other Christmas gifts," she said. She did the same with the Xbox and Wii in prior years, and was able to earn $50 to $100 each by reselling the items online after they were sold out in some stores.

Singleton also filled up two other shopping bags with toys for her son and 12 nephews and nieces, including flash card games, a mini plastic golf set for $7.50 and a Home Depot toy tool set, normally priced around $26, for $9.99.

Related: 7 hot toys for the holidays

Stores have been gunning to be the first to open for the big annual holiday sales. This year, Toys R Us and Walmart (WMT, Fortune 500) both opened at 8 p.m.

"Our customers love the earlier opening," said Toys R Us CEO Jerry Storch.

Nationwide, fewer shoppers are expected in stores this Black Friday weekend, but sales are nevertheless expected to be strong.

Johnny Prowitt, 21, plans to spend about $500 on gifts for his 4-year-old daughter Angelina, including a LeapPad 2 tablet, Disney Princess dresses and a mermaid Dora the Explorer doll.

He works at a shoe store in Times Square and headed over to Toys R Us as soon as his shift was over.

"I spoil her. She's my princess," he said. "I worked all day today and I missed Thanksgiving to make sure I can get gifts for her. But it's okay. There's a plate of leftovers waiting for me when I get home."

First Published: November 22, 2012: 11:44 PM ET

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