4 ms·

Do you think Daily Deals are a fundamentally flawed concept? I tend to think there's nothing wrong with them other than an over-saturation of the market and a

by timdorr 14y ago

Do you think Daily Deals are a fundamentally flawed concept? I tend to think there's nothing wrong with them other than an over-saturation of the market and a prevailing attitude that says all you need is a sufficiently large mailing list to win. But that's just my outsider's view.

prostoalex 14y ago
Indeed. If you're a restaurant/spa/bowling alley in need of drumming up some business, the daily deals channel, with all of its issues, will still generate the most qualified leads for the buck. Other channels are newspaper or Yellow Pages ads (probably dead) or a combo of Google/Facebook micro-targeted ads.
- tomasien 14y ago
  The only, repeat the ONLY thing that matters, is cost to acquire a customer and the value of that customer to you in the term for which you can afford to measure. Daily Deals RARELY put you in the positive for that metric unless your conversions and retention numbers in the amount of time you can afford to measure are fantastic.
kloncks 14y ago
I think doing something that eats away 90% of a merchant's revenue is not sustainable in the long run and arguably something illogical if you just run it once too.
nazgulnarsil 14y ago
Daily Deals aren't doomed, it's just that businesses AND the people providing the platforms don't really understand how to take maximum advantage of price discrimination. Larger companies have already figured this stuff out and the way they structure their own deals, sales, and price matching should be looked to a a model.
azylman 14y ago
Daily deals like Groupon are fundamentally flawed in certain markets. The problem is that it rarely generates repeat customers and/or customer loyalty - they tend to generate customers that come once, when they have a coupon, and never come again. So unless your business is high margin, you're almost guaranteed to lose money from daily deals. Thus, it's very good for things like paintball and skydiving and very bad for restaurants.
mead5432 14y ago
It's not that they are flawed, it's more about the businesses that provide the services aren't in a great position to understand how to leverage the deal. These can bring in a short term influx of customers but unless the small business has some sense about how to convert those "daily deal" people, it's just blowing money. In the end, daily deal sites are just another marketing channel. It helps to bring people in but if you can't convert, your ROI will ultimately be negative. This isn't something that small businesses can't understand, it is just not how they view these sites... they only see dozens and dozens of people coming in the door.
tomasien 14y ago
"Daily Deals" are just one format for solving the physical businesses initial distribution problem. It's a one-size-fits-all solution that actually only works for high margin businesses. For us, we solved this problem for bars, who have this really specific opportunity/problem where when they really need to fill up their bars at very specific times, when they're empty but didn't expect to be. The reasons are too numerous to mention, but it's something every single bar owner will tell you if they've thought about it at all. However, other industries have other problems, and DAILY Deals solve so few of them. From our analysis, massage therapists and similar businesses (luxury, high margin, service based companies) were the only ones who benefitted across the board.
saalweachter 14y ago
I think I'd say the problem is that Daily Deals is a fantastic and valuable service, but not a billion dollar business. Daily deals works by drastic price cuts, the end. That means it costs the merchant far more than just what they pay the middleman. The middlemen can't charge more than pocket-change for the service or it just don't work. So the future as I see it for daily deals sites is small companies making decent money charging huge numbers of businesses tiny commissions to promote their sales through largely automated platforms. It's perfectly suited to a ten-man company, which is why I personally think the over capitalized megacorps are doomed.
btilly 14y ago
They are flawed unless you can do something about retention. Has anyone tried the concept where the "deal" is that you go, name the site, and get a coupon giving you a deep discount the SECOND time you go back to that store? That would seem to make more sense. Because everyone that the store gives the deal to, has actually paid full price once. And wanted to go back. And if you've been twice, you're more likely to go 3x. And furthermore most of the failed leads were a sale, so nothing was lost.
- dangero 14y ago
  CVS, El Pollo Loco to name 2 that I've interacted with lately. When you buy something there, they give you coupons at the register for next time that are pretty deep. I'm guessing this is a proven effective marketing technique judging by the big companies using it.
  - rdtsc 14y ago
    So for a restaurant for example the coupon can be customized based on the age, gender, how many in the party and what they already ordered. The value of the coupons could be even computed in realtime, based on supply and demand + some safety rules built in. Everyone at a different times could get a different coupon for a different value.
  - btilly 14y ago
    The coupons that you're talking about are for specific products. The idea being that you come in to get that price on one thing, and wind up picking up others at full price.
    - cpeterso 14y ago
      Some stores offer coupons for your next purchase. For example, Gap gave me coupon for 20% off any one item if I complete their online survey. That's a pretty big discount, so that survey information must be pretty valuable.
      - 14y ago
the_watcher 14y ago
Daily Deals aren't a fundamentally flawed concept. We use them at my company and they are a great channel for us. They just need to be managed correctly.
xeon47m 14y ago
Coupons have been around for years and will continue to exist as "deals" despite different distribution methods that involve others. Give the market two to three years to consolidate and reach a sustainable level that doesn't overwhelm or burn the merchants and end consumers.

by timdorr 14y ago

prostoalex 14y ago

Indeed. If you're a restaurant/spa/bowling alley in need of drumming up some business, the daily deals channel, with all of its issues, will still generate the most qualified leads for the buck. Other channels are newspaper or Yellow Pages ads (probably dead) or a combo of Google/Facebook micro-targeted ads.

tomasien 14y ago
The only, repeat the ONLY thing that matters, is cost to acquire a customer and the value of that customer to you in the term for which you can afford to measure. Daily Deals RARELY put you in the positive for that metric unless your conversions and retention numbers in the amount of time you can afford to measure are fantastic.

kloncks 14y ago

I think doing something that eats away 90% of a merchant's revenue is not sustainable in the long run and arguably something illogical if you just run it once too.

nazgulnarsil 14y ago

Daily Deals aren't doomed, it's just that businesses AND the people providing the platforms don't really understand how to take maximum advantage of price discrimination. Larger companies have already figured this stuff out and the way they structure their own deals, sales, and price matching should be looked to a a model.

azylman 14y ago

Daily deals like Groupon are fundamentally flawed in certain markets. The problem is that it rarely generates repeat customers and/or customer loyalty - they tend to generate customers that come once, when they have a coupon, and never come again. So unless your business is high margin, you're almost guaranteed to lose money from daily deals. Thus, it's very good for things like paintball and skydiving and very bad for restaurants.

mead5432 14y ago

It's not that they are flawed, it's more about the businesses that provide the services aren't in a great position to understand how to leverage the deal. These can bring in a short term influx of customers but unless the small business has some sense about how to convert those "daily deal" people, it's just blowing money. In the end, daily deal sites are just another marketing channel. It helps to bring people in but if you can't convert, your ROI will ultimately be negative. This isn't something that small businesses can't understand, it is just not how they view these sites... they only see dozens and dozens of people coming in the door.

tomasien 14y ago

"Daily Deals" are just one format for solving the physical businesses initial distribution problem. It's a one-size-fits-all solution that actually only works for high margin businesses. For us, we solved this problem for bars, who have this really specific opportunity/problem where when they really need to fill up their bars at very specific times, when they're empty but didn't expect to be. The reasons are too numerous to mention, but it's something every single bar owner will tell you if they've thought about it at all. However, other industries have other problems, and DAILY Deals solve so few of them. From our analysis, massage therapists and similar businesses (luxury, high margin, service based companies) were the only ones who benefitted across the board.

saalweachter 14y ago

I think I'd say the problem is that Daily Deals is a fantastic and valuable service, but not a billion dollar business. Daily deals works by drastic price cuts, the end. That means it costs the merchant far more than just what they pay the middleman. The middlemen can't charge more than pocket-change for the service or it just don't work. So the future as I see it for daily deals sites is small companies making decent money charging huge numbers of businesses tiny commissions to promote their sales through largely automated platforms. It's perfectly suited to a ten-man company, which is why I personally think the over capitalized megacorps are doomed.

btilly 14y ago

They are flawed unless you can do something about retention. Has anyone tried the concept where the "deal" is that you go, name the site, and get a coupon giving you a deep discount the SECOND time you go back to that store? That would seem to make more sense. Because everyone that the store gives the deal to, has actually paid full price once. And wanted to go back. And if you've been twice, you're more likely to go 3x. And furthermore most of the failed leads were a sale, so nothing was lost.

dangero 14y ago
CVS, El Pollo Loco to name 2 that I've interacted with lately. When you buy something there, they give you coupons at the register for next time that are pretty deep. I'm guessing this is a proven effective marketing technique judging by the big companies using it.
- rdtsc 14y ago
  So for a restaurant for example the coupon can be customized based on the age, gender, how many in the party and what they already ordered. The value of the coupons could be even computed in realtime, based on supply and demand + some safety rules built in. Everyone at a different times could get a different coupon for a different value.
- btilly 14y ago
  The coupons that you're talking about are for specific products. The idea being that you come in to get that price on one thing, and wind up picking up others at full price.
  - cpeterso 14y ago
    Some stores offer coupons for your next purchase. For example, Gap gave me coupon for 20% off any one item if I complete their online survey. That's a pretty big discount, so that survey information must be pretty valuable.
    - 14y ago

the_watcher 14y ago

Daily Deals aren't a fundamentally flawed concept. We use them at my company and they are a great channel for us. They just need to be managed correctly.

xeon47m 14y ago

Coupons have been around for years and will continue to exist as "deals" despite different distribution methods that involve others. Give the market two to three years to consolidate and reach a sustainable level that doesn't overwhelm or burn the merchants and end consumers.