Are Daily Deals on the Chopping Block?

A few months ago, we started seeing the first signs of decline for daily deal sites, and now it looks like things might be getting even rockier for them.

Daily deals exploded into a multi-billion dollar industry, reeling in businesses and consumers through their ability to create targeted offers in local markets with an easy-to-use interface—and who doesn’t love a good deal?

However, the question lingers as to whether or not these sites will be sustainable in the future.

Let’s lay out the facts:

Everyone Loves to Save Money.
First, the positive. Daily deals are simple. Each day, retailers create deep discounts on a product or service and offer them via digital coupons to a large number of customers within a specific time period. These discounts have been of high demand lately simply because who doesn’t want to save a few bucks?

Facebook, Yelp, Google are Struggling.
Facebook recently ended its newly launched product, Facebook Deals, and Yelp is tweaking its daily deals feature as well. Google Offers is another company struggling to make a name for itself in the daily deals scene, with revenues declining this month. It’s unclear as to whether or not these companies will re-enter the daily deals industry later when they have developed a better strategy. Who knows, maybe they have something up their sleeve that will turn out to be a game changer.

Groupon is in Legal Trouble
A couple legal gaffes have erupted in the past couple months, landing Groupon in hot water. A former employee is suing Groupon, claiming the company didn’t pay her overtime and thus violated wage laws. Also under scrutiny, is CEO Andrew Mason, who sent an internal memo to employees in August flaunting the company’s growth, during what was supposed to be the “quiet period” of Groupon’s IPO. The leaked memo has delayed Groupon’s IPO, leaving many investors, employees, businesses and consumers feeling a little hesitant about the company’s future.

Current Models are Changing.

Groupon is already altering its current service and adding, Groupon Now, where businesses can fill seats during slow times using time-specific deals. Groupon hopes this time-based deals model will be the future of daily deals, redefining the consumer habits of society.

Daily Deal Industry: Overkill.

With almost 700 daily deal clones inundating the market, which ones do you choose? Consumers are most likely becoming overwhelmed by the amount of digital coupons floating around out there and the hundreds of deal sites to choose from.

Whether the Daily Deal Era will continue or die out, I still maintain that one important concept reigns true: While deep group discounting is a successful mechanism for spreading a business’ message about a product or service, it falls short in the area of customer retention and loyalty.

Will daily deals still be around in the future? Maybe. No doubt, there is a ton of power in the ability to drive people into local businesses through deals, but I believe there are some glitches in the daily deals strategy that still need to be worked out. We’ll just have to sit back, relax, and watch how the industry plays out in the next few months.


Article first published as Are Daily Deals on the Chopping Block?< > on Technorati.


2 responses

  1. Excellent post Alex – thanks!

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