Tuesday, March 5, 2013
The overkill of daily deals
As you may heard that the biggest coupon company in the world just fired its founder for the poor result the company was in recently. It started great when it debuted in the stock market due to the euphoria (?!) surrounding internet companies and then it has fizzled out leaving many investors at a great loss from the initial public offering (IPO). There can be many reasons that can be attributed to this cause but regardless of this, the business model on which this company was based is very easy to copy as witnessed by hundreds of coupon sites. Although being the first ensures you that you will be the leader for a long time but the barriers to entry is so low that anybody with some kind of computer knowledge can have a website up and running in a few days. But the catch is that there are on finite numbers of retailers that you are trying to be your customers and even less are willing to offer the kind of discount that these companies are offering. Fifty percent discount and on top of this, you still have to share money with the coupon company is a money losing deal from the start. You may gain some customers but I doubt it that you will get the long term customers that the retailers must be expecting. I believe that once you hook up the customers on some deals than they will wait for the deal to come again or just go to your next competitor who has the more or less the same deal.