3 ms·

Are there network effects in coupons/deals? You mean building the relationships with merchants?

• raldi 15y ago
  Of course there are! Consumers want to join the service that has the best (and most) deals. The service with the most consumers is going to be able to get the most merchants signed up and get the best deals out of them. It's a textbook virtuous cycle.
  • blrgeek 15y ago
    My experience is consumers join as many daily deal sites as they want to. They are not loyal to one. The only cost of joining one more is an email a day.
    • raldi 15y ago
      You could say the same thing about auction buyers, and yet 99% of the world sticks with eBay rather than waste time checking a second site.
      • blrgeek 15y ago
        Not true - auction buyers have a network effect. More buyers ==> more sellers ==> more buyers. As someone who wants to occasionally buy something 'rare' or second hand, I would go where the most sellers are when I want to find something! This itself causes a significant moat. Amazon has finally started chipping away at the sellers, by providing an even larger pool of proven buyers. Local deal sites are by defn focused on many independent local market. Their key promo channel is email to signed up users, since most people won't go to a website to look at deals everyday. What's the barrier to entry for another site - getting the same user signed up? There will certainly be consolidation, there will be two or three local deals sites left over. They will certainly not enjoy the margins GroupOn currently commands.
        • raldi 15y ago
          "More buyers ==> more sellers ==> more buyers" ... just like "more bargain hunters ==> more bargain-offering affiliates ==> more bargain hunters"