The Daily Deal — Dead Man Walking?

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The evolution of daily deals has not been unlike that of other successful startup stories. First comes the uncertainty and poking fun at the “silly” idea. Eventually, a breakthrough leads to early traction and creating a loyal following. Success breeds competition and things start to get interesting. Somewhere there is a peak which ultimately leads to the downfall and destruction of the former hero; at least in the court of public opinion. While the story is the same, the pace at which the deal industry went through those stages has dramatically amplified the signal. Almost four years later, where do we stand?

Consumers: Are they really tired of saving 50% on a massage? Absolutely not! Are they tired of digging through deals for lug nuts and back waxing to find it. Of course they are. Don’t mistake this “deal fatigue” for what it really is; non-relevance fatigue. With the ambush of deal content, personalization is the name of the game and every deal company is working hard to do this well. We’re living in a time when millionaire reality show celebrities are taking up couponing as a hobby, for crying out loud. Saving money is in vogue! I’m looking at you Kourtney Kardashian. As long as deal providers can find unobtrusive ways of delivering relevant deals at the right time, consumers will be waiting with open wallets.

Merchants: I’ve seen data across the spectrum on what percentage of merchants will or won’t continue offering deals in the future. If you look hard enough, you’ll be able to find studies supporting whatever you want to believe. Based on my own interactions in the space and with merchants, I feel pretty strongly that there are enough interest for the long haul, including a surprising number of merchants who haven’t even dabbled in the deals space yet, but are considering it. Are there enough interested merchants to support 30 deal companies in a city running unique content every day? Not a chance, but more on that in a minute. From stronger merchant management tools to local Chamber of Commerce events discussing the pros and cons of the opportunity, the major players are taking the right steps to evolve with the concept.

Deal Providers: Without a doubt, this will continue to be the biggest change in the space. I don’t expect the numbers to drop as quickly as they went up through 2009 and 2010, but they will drop steadily. With the “non-relevance fatigue” in full effect and most deal companies having very little ability to adapt beyond the early deal-a-day model, we’re going to continue seeing rollups and closed shops. So who will survive? The largest, of course. Outside that, I see the players who focus on a niche, i.e. Lot18 or DoggyLoot, doing really well. By sticking to a niche they’ve already overcome the biggest consumer complaint today; irrelevant content. I may not visit these sites every day, but when I do, I know what I’m going to get and I’m much more inclined to make a purchase.

Supporting Cast: You’d be hard pressed these days to find a daily deal consumer who spends their time exclusively on the websites of deal providers. Whether it’s an aggregator like Yipit or a personal deal organizer like DealsGoRound‘s Deal Wallet, consumers are looking for more and there are plenty of startups there to meet the demand. Unlike deal providers, I don’t see this on the decline. I believe we’ll actually see a flux of the supporting cast being created and dieing in a constant effort to improve the overall value of the ecosystem.

To borrow a great line from Cy Sperling, I’m not only a daily deal president, but I’m also a client. Despite what others might think, I’m very much looking forward to what’s to come!

Kris Petersen (@KrisPetersen) is the CEO and Founder of DealsGoRound, a universal Deal Wallet and secondary market for daily deals.