Opinion: The End of Daily Deals?

May 25, 2011 § Leave a comment

5.25.11 At this point, I have signed up for daily deals with Rue La La, Jack Threads, Level Up, and at least 1 or 2 others. I am now getting a deluge of daily emails and these companies are promising to send more of these offers and a new companies with marginally different value propositions are popping up as fast as the daily deals. In fact I heard even Glen Beck is starting a daily deal site with 50% discount offers – how original.

Here is my prediction for the daily deal business:

  • The Fashion Models Will Persist: This model is the only shining star to me in the segment. It is a proven distribution channel and has a clear value proposition around fashion and typically high-end brands. It is the final step of the fashion outlet distribution chain and is based on established relationships with both suppliers and consumers.
  • Local Deals Will Lose Their Attractiveness: Local deals will start to get less attractive over time as companies begin pushing back on costs and vendors like Groupon and Living Social drop their prices as they compete for the same businesses. The days of 50% off are going to slowly disappear and coupons will be as valuable as what the store would offer without having a flash sale. Furthermore, I believe that businesses are having a very mixed reaction to the success. For some it is a great for others a frustrating loss of money.
  • Flash Sales to Online Circular: I can’t imagine we are far off from a a company that will take all of the daily emails and aggregate them into one place. It will make it easier to see what is being offered and through smart filtering consumers can look for deals based on what they might be interested in – dining, shopping, services, etc. Deals can still be limited, but having a consolidated format is eventually what consumers will want from flash deals.

Without something to control the market both consumers and business will get fatigued. Generally speaking I think a backlash for these sites is not far off and I am looking forward to a winner that will emerge to both control the market and limit the distracting number of deals that hit consumer email boxes everyday.

Curious to see what others think…

Updated on 6.14.11: Since Groupon IPO is heating up and they have shared their financials, Goupon is under some heat. There have been more stories of companies losing money, pressures on  Groupon, and their ability to be viable. Here is a great distillation of the arguments on TechCrunch as to why Groupon is not a good long term bet: http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/


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