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The Deals Space: It’s Easy to Start, But Not to Grow

A quick analysis of the industry

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The Deals Space: It’s Easy to Start, But Not to Grow
[ Business]

Back in June, Mary Song, CEO of Yuupon, gave WebProNews the following predictions for the deals space:

1. Facebook Deals will not be a major contender as is.  Why? Facebook Deals is a self-serve platform and like ad-words is unlikely to be directly adopted by merchants.  Instead, it will likely foster a community of agencies that help companies get their deals on Facebook. Currently lacks mass to make this happen.
 
2. The daily deals space will mature and the flexibility that merchants may see today will disappear or become commoditized.  Why? Daily deals / flash deals are still in infancy and a lot of trial and error/learning is still taking place. As the space matures a lot of this will be figured out and will become much more cookie cutter.  This works, this doesn’t, want to run a deal? Here are the parameters… The early adopters will get to play a role in shaping how flash deals operate.
 
3. Major shift to mobile delivery and fulfillment – where we’ll no longer need to use paper vouchers.  Why? Let’s face it, printing a paper voucher and bringing it with you seems so 1990, the larger sites already offer some mobile delivery and fulfillment - expect to see major developments on the mobile front. Instant and Now are two examples.
 
4. More partnerships between players – Ebay is already in the daily deal space, and with their acquisition of Where, they made a strong move into the mobile hyperlocal space; however they are going to make a major move into the local deals space with their acquisition of Magento ecommerce software.

We may see some additional acquisitions from Ebay.
 
5. Groupon Getaways/Expedia is not a slam dunk but does validate the travel voucher model. Existing issues between OTAs, bait and switch with deal pricing, etc… may stand in the way of being the dominant player in the travel deal vertical.
 
6. Multiple players will exist and thrive in flash travel ddeal vertical – possibly as many as ten.

Now, Facebook has already announced that it is shutting down its Deals product (though its Check-in deals will remain). Number one has already come true.

“Facebook deals relied heavily on inbound sales which even for someone with as large a user base as Facebook that clearly missed the mark,” Song tells WebProNews now. “Daily deals are not as easy to source as Groupon and LivingSocial make it appear. Additionally Facebook users belong to Facebook primarily to keep in touch with friends and family, people didn’t join Facebook to receive marketing messages. There are so many deals available today that people opt to receive that getting them to dig to find Facebook deals is easy to see in hindsight was not a winning strategy.”

Song does think Facebook’s Check-in Deals will be successful as time goes on.

“This is quite different as it allows merchants to engage consumers while they are on property for example a hotel could offer 2 for 1 drinks in the bar shortly after someone checks into the hotel or make a game of it with rewards for the most checkins during a stay (for destination resorts) rewarding guests for using the spa, restaurant or other services with discounts on future stays or discounts on additional services during their current stay.”

“Hyper local or deals near me will play a large role in the deals space however I think as the deals space matures it will be one of many offerings that merchants can choose,” she adds.

As previously reported, Hitwise finds that Groupon traffic is down and LivingSocial traffic is up.

“There has been a lot of speculation about this – Groupon and LivingSocial have very different selling methods – Groupon is primarily call center and LivingSocial is primarily boots on the street,” says Song. “No doubt about it when you are in a market you definitely will know your market better and which merchants to work with and which ones to steer clear of perhaps allowing Livingsocial to provide a better user experience overall and a more loyal following.”

“It could also be a result of a shift of spending marketing dollars. Livingsocial has been perhaps marketing more aggressively or creatively,” she adds. “Groupon as the 800 lb gorilla has gotten beaten up quite a bit by the media and stumbled with it’s Super Bowl ad whereas Livingsocial has TV ads that are still running and is probably enjoying benefits of it’s relationship with Amazon that may not be available to Groupon.”

When asked if Groupon be worried, Song simply says, “No.”

“While it’s easy to get into the daily deal marketplace it’s much harder to grow and sustain a daily deal business,” Song tells us. “At this point if you don’t already have a subscriber base and a marketing arm you’re better off partnering with an existing daily deal site rather than try and enter the fray.”

And I’ll leave you with that.

The Deals Space: It’s Easy to Start, But Not to Grow
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