Strange that there is still so much daily-deal stuff being worked on. Is this really fertile ground for a business? (Honest question.) Is everyone still reacting to the Groupon IPO, even though that business has all sorts of smells?
At this point, there are a couple of heavily funded daily deals sites that can afford to hire armies of sales people to literally pester their way into multiple local markets. My friends that work at one of these firms say there's about 60 devs supporting 4,000 sales people. My friends that own local restaurants constantly complain about the incessant daily deal sales reps that won't leave them alone to sign up.
These larger firms make their data available to smaller sites via APIs, allowing for firms like Yippit, Sqoot, etc to serve as aggregators. These sites then skim off the top of the deal sales, sometimes getting 50% of the commission on purchased deals.
The danger is that the larger sites that are the life blood of the system run on enormous deficits to maintain those armies of sales reps.
As DHH put it, local deals is like finding oil on the moon: a valuable resource that might ultimately prove too costly to extract.
That's quite interesting. I'm in a non-US market where deals have traditionally tended to be not that attractive, perhaps because of product import costs and perhaps because of a captive-market situation, and I'm wondering if the pestering-salesperson approach is the right one to induce more businesses to open up to the possibility of offering good deals.
We have group-buying (Groupon-style) deals, which has opened up the way somewhat, but I'm playing around with a more traditional deal-listing model that doesn't push merchants as hard. Do you think salespeople is the only way to keep merchants offering deals, for a listing model? It seems costly but also the only way to keep merchants listing deals even when the revenue outcomes of previous outings haven't been that spectacular.
I appreciate any thoughts you or anyone else might have on the issue - thanks!
The daily deal business can make a lot of money and consumers (particularly women) love it.
However as Groupon has proven they are typically very dependent on expensive marketing channels in order to achieve growth. Over the last year or so the market has become really saturated with daily deals sites and so the competition for customers is fierce. I think as Groupon's woes become increasingly apparent, the daily deals bubble will start to implode (if it hasn't begun to already)...
Well, I guess that is pretty much what I'm thinking. The barrier to entry is low, but that just means the barrier to having your userbase taken by Groupon or LivingSocial is equally low.
