Are daily deals sites going down for the count?
Another bad day for Groupon shares, which closed Tuesday at $4.54, a fraction of their 52-week high of $31.14. The latest drop is attributed to a downgrade by Barclays LLC, and as Bloomberg reports, the company’s shares have lost 77 percent of their value since last fall’s ballyhooed IPO.
The latest dip has renewed discussion about the viability of daily deals promoters in general; are they a flash in the pan or a sustainable long-term business model?
With media outlets in so many markets adding a daily deal to their offerings, and area merchants and businesses being pursued by deals operators at all levels, it might be a good idea to check in with local companies and consumers about their take on the trend.
Find a shortcut for surveying the deals in your area, like Koopik, which will send you a daily e-mail aggregating all of the offers it finds in your market. Reviewing a few days worth of these round-ups will give you a good feel for the kind of products and services that are being purveyed via deal sites, and leads on companies to contact. It’ll also help you identify consumer audiences to quiz about the utility of these deals; a sampling in my area, for example, found a lot of deals aimed at golfers.
Also survey shopping centers, downtown districts and strip malls to find companies that have rejected the notion of daily deals, either without trying it or after an experience.
Living Social launched in 2007.
One common complaint, for example, is that required discounts and commissions erode profits and force companies to offer services at a loss.
This MySmallBizResources.com article explains more pros and cons from the business point of view, and suggests that the promotions may be best viewed as a marketing expense than a lure for profitable new customers.
Groupon launched in November 2008.
Slate last week proclaimed “Ding Dong, Daily Deals are Dead,” calling the business model a “crummy” one that rips off small businesses with less-than-frank sales pitches about what the deals really entail.
StreetFightMag.com, which covers the hyperlocal market (subscribe to their Twitter feed) says deals sites must “evolve or die” amid the growth of other alternative payment systems and mobile wallets. You might ask area merchants if they have found more viable digital marketing tools, like the ability to accept PayPal at point of sale.
On the other hand, a recent Rice University study finds that “Daily deals sites show no sign of slowing down,” using survey data from 641 companies as recent as May 2012. The study by a business management professor found that businesses doing multiple deals tended to have the best impression of the model, while few doing only one promotion enjoyed a profit.
Gannett launched Deal Chicken in 2011.
The author also helpfully ranks businesses that tend to do well with daily deals — doctors,dentists, fitness and photography among them — while finding that retailers and restaurants fare poorly. I like that aspect of the study because it shows that even if you’re on a non-retail beat, like health care or autos, there is still value in taking a look at how daily deals are working for the companies and consumers you cover.
Another idea: Take a look at niche sites, like YogiDeals, which focuses on yoga. And if you cover workplace, personal finance or consumer beats, maybe check out what it’s like to work for a daily deals site — what are the pay and employment conditions like for sales reps? Google for jobs in your area and read this take from Daily Deals Media for more ideas.
Another source of information may be the nascent Global Daily Deals Association.,