To say I’m disgusted at Facebook giving up on Groupon-like daily deals would be a huge understatement. But I have no better words. Sure, as Megan Casey points out in this terrific article, it’s consumers who win the most in the Daily Deals game, and with virtually no barriers to entry in the Daily Deals marketplace even a company with as seemingly-perfect positioning as Facebook is going to find standing out to be a tough thing.
But nobody, and I mean nobody (including 800-pound Daily Deals gorilla Groupon) has cracked the Daily Deals nut yet, and Facebook, as the largest grouping of people in the world, can’t possibly be so inept as to not be able to do Daily Deals the right way, right?
Let’s assume that the issue of whether Daily Deals sites like Groupon are issuing “coupons” blows over (and it almost certainly will; that’s how lawyers make livings). The idea of the Daily Deal “working” comes down to finding the win/win/win for consumers, merchants, and the Daily Deals sites.
Consumers already have their win; nice fat discounts at local merchants. Hooray!
But both merchants and Daily Deals Purveyors are struggling. I can’t understand why (other than poor management decisions at both needing some tweaking, business-change-wise). So here’s the problem—and the solution:
Daily Deals sites work for MERCHANTS so long as they view participation in a Daily Deal as a marketing expense/way of acquiring customers. If merchants look at Daily Deals as either a revenue or profit production tool, they’re missing the boat.
That means that they’d better be acquiring new customers and those customers better not think of them as a commodity. So when a Daily Deal site gets you fifty percent off the price of a movie ticket, the merchant is neither acquiring customers nor creating loyalty. On the other hand, a salon or masseuse might be doing both.
And Restaurants, which seem to be doing the Daily Deal thing more than anyone? A total crap-shoot.
In other words, the right KIND of merchant doing the right kind of deal, benefits. Manage your business change, people!
For the deals sites, I’m astonished that there isn’t more profit happening. I understand that Groupon has become SO big, SO fast that they have scaling problems and employee inefficiencies, but you’d think SOMEONE there would be a good enough manager to reign things in … or that one of the Venture Capital firms backing Groupon would make that happen forcefully. Seriously, think about it; Why is Groupon losing so much money when they collect such huge commissions every day?
Bad management. Not a trick question. Let’s move on.
There are in fact no real barriers to entry in the Daily Deals business. And while all of the six hundred or so small-potatoes entities trying to compete in that space would like to be Groupon or Facebook, they needn’t be, so seriously, WHO’S RUNNING THOSE BUSINESSES?
I hate Facebook, but I sure hope they get back in the Daily Deals game, because it’s custom made for a company Facebook’s size with Facebook’s demographic. Groupon? Wake up, people.
Me? I’m off to shoot some pool with the half-price voucher I bought from Google.