As the drama continues to build in the daily deal industry, one can’t help but wonder about the future of the current phenomenon. The leader of the pack, Groupon, has specifically had its share of negative press lately involving legal trouble from its own employees and a delay in its IPO.
Although its IPO is reportedly back on track, a sense of uncertainty is starting to grow in regards to daily deals.
Is the phenomenon of daily deals going away? What do you think?
While there are people who would argue both sides of the future of daily deals’ dispute, the truth is, it’s really hard to say at this point. There have, however, been people who have made predictions about them including Mary Song, the CEO of travel discount site Yuupon.
Just a few months ago, she shared these predictions:
1. Facebook Deals will not be a major contender as is.
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 deal vertical – possibly as many as ten.
If you’re at all familiar with the space, you know that some of these have already come true. For example, Facebook, just 4 months after it entered the daily deal space, announced that it would be discontinuing its deals’ product. Song told us that she believed this would happen because Facebook did not effectively position its product. It was located in a place that most users would not visit regularly, and therefore, could not get very much traction.
She also told us that Facebook did not have a marketplace for deals. As she explained, most people don’t get on Facebook to make purchases, and those that do, aren’t typically repeat buyers. She thinks that both of these reasons played a big role in Facebook shuttering its product.
Facebook did say that it would be keeping its check-in deals, and Song believes they have potential. She said that merchants could use them to build loyalty programs and to drive revenue.
Another one of her predictions that we’re already seeing is the shift to mobile vouchers. Song said this was “bound to happen” with the increased use and convenience of smartphones.
Although the others have not come true yet, she did offer some further insight into the overall space. She told us that even though Groupon is the leader, she could see LivingSocial overtaking it. According to her, LivingSocial could actually be fine with its 2nd place position.
“Groupon is sort of paving the way, making mistakes, and LivingSocial is following behind learning from those mistakes and not making the same ones,” she said.
Song went on to say that she thinks that Google will be successful in the market because of its already broad reach.
“My prediction is that they won’t be as successful as LivingSocial or Groupon,” she pointed out.
Specifically, she believes that Google will be 1 of the top 3 daily deal providers but said that it wouldn’t hold positions 1 or 2.
In terms of the sustainability of daily deal services, Song told us that the market would continue to grow but that the number of providers would be greatly reduced.
“The market will sustain itself,” she said. “I don’t think the number of players that are considered daily deals’ sites will continue to exist.”
At this point, there well over 500 deals’ services, but she said that they are growing as individual services very slowly. As a result, she believes that these sites will be greatly reduced by 2012. Some sites will be merged or acquired, and others will simply have to shut down.
“It’s really easy to get into the daily deals’ market… but it’s not easy to run a daily deals’ site,” she added.
What’s your prediction for the overall daily deal industry and also the individual deal providers?