Daily deals. One day wonders?

You’d have to be deaf and blind not have noticed the daily deal companies popping up like mushrooms of late, all trying to get a slice of the “Groupon” action. A quick google of the phrase “daily deals Cape Town” gives me :

www.citymob.co.za
www.ubuntudeal.co.za
www.cityslicker.co.za
www.mycitydeal.co.za
www.couponline.co.za
www.dealson.co.za
www.skoop.co.za
www.zappon.co.za
www.dealio.co.za
www.alldeals.co.za
www.wicount.co.za

… the list goes on.

I’ve so far bought R800 worth of Exclus1ves vouchers for R200, R390 worth of Burblepix photo album for R190, a R190 car valet for R90, and that’s where my buying spree has more or less fizzled out. Reason being that most of the offers are for spa & beauty treatments, dinners in places I’d spend as much in diesel to get to as saving on the sushi or steak. There are no definitely no power tools, grocery items or Eskom vouchers on offer!

Groupon's recent IPO fueled the “next tech bubble” rumor which has been rumbling for a few months.

If you’re running a service where your profit is highly dependent on traffic through the door and your costs aren’t highly geared to volumes, this could be a decent marketing and promotion option for you. If you’re the owner of a coffee shop and you want to make more people aware of your exceptional value for money, and you know that once they’ve tasted the good stuff, they’ll be back, maybe a daily deal will work for you. If your tagged market are internet savvy… Maybe… If.

If you see it as a once-off, loss-leader, promotional shot in the dusk. If your target market are likely to be lurking on Twitter, Facebook and a daily deals mailing list. If people are likely to keep coming back after the first purchase. If your margins can take a serious hit on the promo price.

That last one is where it dawned on me why most of the stuff floating through my mailbox is not something I’d buy, and why daily deals are not sustainable for any operation whose margins are not somewhat excessive in the first place… I mean “hello?! - who can afford to discount by the obligatory 50% to 75% needed to get in to a daily deal promo and still run a sustainable business?” Apple? (ah yes, but they don't need it - too many of us idiots falling over ourselves to buy their good stuff at inflated prices anyway)

I can see those daily deal players that secure contracts with luxury goods and services companies managing to stick around for a while, but I’ll not be surprised if I google “daily deals Cape Town” in a few years and find very few of the names above still there. It’s fun while it lasts, but I’d rather buy the odd bargain than buy shares in any daily deal company.

Comments

[DaveG]

Michelle Conlin, AP Business Writer takes a jaundiced view of Groupon:

http://www.businessinsider.com/groupons-fall-to-earth-swifter-than-its-fast-rise-2011-10?utm_source=twbutton

[Koos]

and another one I spotted the other day called DealScout (http://www.dealscout.co.za). It lets you choose only the type of deals you want to see, then it searches all of SA's group buying websites and give you a list on the site (or you can subscribe for a daily email) of only deals which meet your criteria. Nice one guys!

[Steward]

Interesting review. On the one hand I agree that the groupon model is unsustainable, but on the other, most financial experts are expecting another recession in the next year or two, something that will only cause people to look for more discounts and deals on products. I think that the next stage regarding these websites will be the daily deal aggregator websites which have already started to pop up. Two to keep your eye on are http://www.dealafrica.co.za (nice layout and filtering options) and http://www.dealmap.com which was purchased by google a few months ago.