Yipit’s blog discusses the ever-widening reach of deals into new areas. For example, the daily deals aggregator says that Groupon’s top grossing deal in August was a travel deal. It then goes on to talk about new and growing deal categories and the distribution of revenue across more segments:
This is also something that Local Offer Network’s Dan Hess said on my Offers Done Right panel in New York: deals are moving into new categories — and margins are holding up.
September 28th, 2011 at 11:06 pm
I believe this is the start of a natural shift of the daily deals model. Some businesses just aren’t suited to run a Daily Deal. For example, restaurants might not be the most advantageous or coffee shops – places where margins are low and you’re using inventory that could otherwise be used at full price. Businesses that are suited to run a Daily Deal will get a bigger focus from Groupon/Living Social and we’ll also start to see niche Daily Deal sites emerge.
I built Crowd Seats on this idea – sports tickets are the perfect match for the Daily Deals industry. First, you’re dealing with perishable inventory. If there is a Sunday Night game, that game is happening whether you sell 1 ticket or 10,000 tickets – there is incentive for teams to make sure there are no unsold seats as that inventory becomes worthless as soon as the game starts. Further, with sports tickets, there will ALWAYS be overages in the form of parking, concessions, souvenirs, etc. $20 Parking, $10 Beers, $8 Hot Dogs – those add up to very significant revenues for teams who otherwise would have just lost that inventory and revenue.
The future of deals is niche!
September 29th, 2011 at 12:45 pm
I think that niche deal sites are thriving and will thrive in selected market segments. I also believe that deals will become a more pervasive way to manage “inventory” for more businesses.
September 29th, 2011 at 7:31 pm
What are the Macro and Micro Econ reasons for this. Here is my impromptu list.
1. Overall economic growth, high unemployment and unresolved real estate market.
2. Daily Deals are one of the few sources of financing for many merchants. (raising short term capital, credit line, etc)
3. Better margins than inventory liquidation
4. New entrants into daily deals such as google which I’m still convinced runs deals mostly below the $40 mark and primarily in the restaurant category. (Yipit Please confirm)
5. Merchants who ran the best performing offers in the past do not run offers again. Daily Deal sites have to target new categories to maintain growth.
6. It’s actually a good form of marketing/advertising?
Many people here just 6 months ago were talking about this space imploding but now it looks like that sentiment has changed.
September 29th, 2011 at 9:06 pm
Edward:
You’ve captured many/most of the reasons that deals are popular. Certainly a poor economy is partly fueling this but there’s now a “culture” of discounts that has taken hold. Google does seem to be taking lower margins.
The market definitely is now collapsing.
September 29th, 2011 at 10:58 pm
Greg:
Would margins be smaller in the case of Google or would volume be higher ?
Will the “culture” have to get use to poorer quality offers or will merchants be forced to run more deals and /or lower prices?
Great day to be talking about prices considering the launch of Kindle Fire @ $200 bucks.
September 29th, 2011 at 11:43 pm
Yipit data shows Google selling more deals in August. However I believe they’re also taking a lower margin.
Re the culture . . . it’s the same as Xmas shopping. Before sales started on 12/26. Now they have to start before to lure people into stores. There’s been a permanent shift in strategy by retailers based on more consumer resistance.