A couple of years ago, daily deal sites such as Groupon seemed to be the wave of the future: retailers would get new customers to stop by to try out their wares and shoppers would get big bargains. Yet, today, the picture is much different. Groupon, for one, has had tough sledding; and even the popularity of daily deal sites seems in question.
In a new story from the New York Times, Stephanie Clifford and Claire Cain Miller write that: “As their E-mail inboxes filled with daily deal offers from Web sites like Groupon, Lea Pische and Edwin Hermawan (pictured below), a pizzeria waitress and a former lawyer living on the Lower East Side, finally decided to buy one: a discounted Skillshare class on how to start a business. Their business plan? It was a service that would unsubscribe people from all those daily deal E-mails. Three months after its introduction, UnsubscribeDeals.com has 7,800 unsubscribers, a number that nearly doubled in the last month.”
According to Clifford and Cain Miller, daily deal sites such as Groupon and LivingSocial initially gained followers “because they seemed to offer something for everyone: small businesses got a novel way to bring new customers in the door, shoppers got a discount, and the deal providers got a large cut of every sale.” But retailers began to see that (1) new customers mostly stayed within the price limit of the deal; so they typically lost money. (2) The new customers rarely returned after they had gotten their heavily discounted deal. At the same time, shoppers found their E-mail inboxes deluged with daily offers for goods and services in which they had little or no interest. As a result, 800 daily deal sites shut down during the second half of 2011 according to Daily Deal Media.
Click the picture of Pische and Hermawan to access the full, in-depth Times’ article.
Photo by Ozier Muhammad/New York Times