Daily Deals Sites – The Honest Truth. Part 1
Over the next few weeks I will be delving into the booming world of Daily Deals Sites with my blog series. I have been interviewing people, seeking lots of feedback through social networks, gathering articles and learning about this new craze that according to one report will be a $400M industry in Australia alone by the end of 2011.
This morning I woke to 3 articles about Daily Deals sites in my stream.
The first is written by Rita McGrath in today’s Harvard Business Review. Rita writes how Google dodged a bullet by having Groupon reject their $5.3Billion offer. Since then we have seen lots of speculation about Groupon, and an IPO that seems to constantly be postponed. Could there be more than meets the eye to the rapidly collapsing walls within Groupon, or is the deals industry as one of my interviewees put it: “The world’s newest and most successful shams”
In the same article, Rita cites research conducted by Thumbtack that many daily deals in local service industry are actually priced equal or higher than the average local price of the service. Could our need for ‘finding a saving’ in tough economic times be clouding our ability to think logically and rationally?
The second article I read this morning was by Noah Davis at Business Insider restating the research conducted by Thumbtack, and presented some interesting graphs (from Business Insider):
Approaching this from a consumer perspective it is rather disappointing to see these results when in one hand Deals companies are bragging about their value, their worth, their contribution to providing an ‘solution’ to our woes, and on the other hand consumers trying to find the best value for money in a tough economy, still getting ripped off.
From a business perspective, this would only make me angry. As a business owner, in tough economic times, and thanks to the internet a highly competitive market for all industries, Daily Deals sites make more money for their own wallets, and leave the business with the overwhelming task to managing brand loyalty, customer service, quality and responsiveness.
The last update from my stream is not directly related to the daily deals industry, but rather a social network platform that is doing it right with Daily Deals.
Today Foursquare launched a new service called Foursquare “Radar”. Foursquare is all about location, and in the not too distant past Foursquare introduced “Explore” which is features local deals and venue information for businesses, and the ability for businesses to add ‘Specials’.
Foursquare Explore also features trending and popular destinations around the Smartphone user’s location.
Now with Radar, Foursquare have added a whole new dimension to the Daily Deals Industry. Radar now allows user to set customisable alerts and lists to notify them of all the Daily Deals and specials offered within the Foursquare explore platform. Users set their parameters, and this information feeds through as a push notification when within proximity of the deal or special being offered.
This is the winning formula for daily deals sites. Consumers don’t want mountains of emails to sift through, and businesses don’t want to have to spread their services so far across large masses that it destroys their customer loyalty or experiences. This tool still allows consumers to catch daily deals, when they are most relevant to them and more importantly who they are most relevant too. Consumers have their own brand preferences, and by setting up their lists they can capture the same daily deals and specials offered by businesses, that they would through daily deals sites, with half the time and effort.
American Top-Grade Deals companies Bloomspot and Groupon offers their customers products and services from the top end of the market. This first-class offering helps consumers select the brands they are mostly loyal too, and doesn’t detriment the business by hoarding the masses. Now, with Radar, every company can utilise this service offering by creating brand loyalty to the customers who are interested in their products / services as per consumers’ selections when setting the parameters in their Foursquare Radar application.
Foursquare have today revolutionised the daily deals industry, and it will be interesting to see what the daily deals sites do to adapt to this radical shift.
Next week’s blog is on how businesses can avoid using daily deals sites, and still obtain equivalent or better results.
As always, Share + Enjoy!
