Daily Deal Sites have been making headlines for almost two years now. However, in 2012 it may not be the case. Is 2012 the year of decline for daily deal sites?
Marcia Kaplan points the brutal commission cuts daily deal sites impose on merchants in a post at Practical Ecommerce stating that “The daily deal sites take 40 to 50 percent of the already discounted revenues, leaving merchants with roughly 25 to 30 percent of the retail price.”
Businesses are starting to get over the hype and they are looking at the bottoms lines. Here is what Kaplan thinks we’ll see going into 2012:
- More focus on return on investment by merchants. The novelty of daily deals has worn off and merchants are looking at the bottom line.
- More visibility into consumer behavior. Groupon is making it easier for merchants to get customer feedback by adding a feedback component to its Merchant Center. Groupon recently began surveying all customers about their Groupon experiences immediately after redemption. Merchants can now see the overall percentage of Groupon customers that would recommend their business and scroll through customer comments added in real time.
- A more competitive market as new, well-funded competitors enter the daily deal fray. When Google rolls out a nationwide daily deal offering, it will affect the two big players, Groupon and LivingSocial. Google has lots of cash and will not incur the customer acquisition costs — it has millions of customers already with its pay-per-click ad products — that saddle Groupon and LivingSocial. This may put pressure on Groupon and LivingSocial to increase revenue share for merchants.
Merchants can continue using the “big guys” and constantly fight for a following, but evidence is suggesting this is becoming a harder battle, and they aren’t gaining measurable ROI or insights to their customer base.
As a business owner, wouldn’t it be easier if you could have your own fans, the power of word of mouth, and control at your finger tips? Last week Ryan pointed out that a key to social media ROI comes from tying it to commerce. Welcome to the evolution of the daily deal, the power gets given back to the small business.