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  1. #1
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    How Viable are "Deals" Sites?
    It seems like a new "Deals" site opens an affiliate program almost daily. It seems like they are everywhere now.

    Groupon has had a pretty successful affiliate program for quite awhile, but recently the company's earnings have tumbled, the stock price has dropped significantly, and the CEO was terminated. Today, I received info that, LADeals, which was a pretty successful local "Deals" outfit that I have personally used quite a bit, is shutting down.

    Are people having success with such "Deals" programs? Are sales stable or are they declining? Was it a niche that was overpopulated and that now needs to be culled in order to survive? Was it a fad that has run its course?

    Any thoughts?

    From ChicagoBusiness.com, April 2:

    Shares of Groupon Inc. dropped Thursday after a UBS analyst labeled the online deals company's stock a "Sell."

    The analyst, Eric Sheridan, said that Groupon has a "largely unproven business model" and noted that its management is in transition. He expects shares to fall further.

    Groupon fired its CEO and founder, Andrew Mason, in late February. It is searching for a replacement, a process that could take months.

    Groupon has faced scrutiny about its high marketing expenses and enormous employee base. Its only profitable quarter since going public was the second quarter of last year, and its revenue growth has slowed.

    Investors worry that consumers are tiring of the deals, such as restaurants and spas, on which Groupon built its business. The Chicago company is trying to diversify into product sales, payments services and other areas, but there are concerns that those efforts aren't paying off.
    Note: Mason was an intriguing fellow, who took credit for "inventing" the concept after an argument with a customer service rep after he felt he had gotten screwed on some overpriced product he purchased.
    Last edited by Phil Kaufman aka AffiliateHound; May 2nd, 2013 at 03:19 PM. Reason: typo
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
    "If you don't have time to do it right, when will you have time to do it over?" -John Wooden;
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  2. #2
    ...and a Pirate's heart. Convergence's Avatar
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    Quote Originally Posted by AffiliateHound View Post
    Was it a fad that has run its course?
    Yep. Everyone and their mother has a deals site. Even our local news channels...
    Salty kisses, Sandy toes, and a Pirate's heart...

  3. #3
    Member Prosperent's Avatar
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    It's a bubble, just like cupcakes.....

  4. #4
    Beachy Bill's Avatar
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    Market saturation to the point merchants were losing money - far beyond the cost of initial customer acquisition. Many (too many) customers would not "return" at full price but, instead, waited for another "deal" to be published (somewhere).
    Bill / Marketing Blog @ 12PM - Current project: Resurrecting my "baby" at South Baltimore..
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  6. #5
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    I agree with Bill - what was meant to be an innovative way for merchants to find new customers has ended up costing some of them more than it was worth (in some cases, incurring the wrath of the buying public when something went wrong).

    If you start out as a "deal" merchant, those customers will continue to look for deals... there is no loyalty under those conditions. Plus, there is a finite number of merchants who will sign up..

    Maybe I'm wired differently as a shopper, but buying a product/service from a merchant that is clearly at a loss has never appealed to me.. I suppose it comes from being self-employed, and having been on the receiving end of people who undervalue my own work! I've had friends involved in "deal sites" who were aggressive in their sales pitch (to friends to get involved), which turned me off the concept as well. Most of them had no intention of returning to the merchant.

    My own personal view aside, I see many merchants now offering rotating deals to existing customers which is probably more effective (and costs less!).
    It's a bubble, just like cupcakes
    Thanks for the reminder, I'm going to treat myself to a cupcake this aft!

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  8. #6
    Super Dawg Member Phil Kaufman aka AffiliateHound's Avatar
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    Interesting take, teezone. "I suppose it comes from being self-employed, and having been on the receiving end of people who undervalue my own work! " - That applies to me, too, but the times that I have used such "deals" have been not for products that someone has worked at developing and marketing, but things like airport parking, and restaurants that I would like to try out, and if good, would return to, without additional deals. My last LADeals purchase was a super-low price for a Las Vegas hotel that I never would have thought of staying at otherwise, and they will more than make up for the low rate with other spending. It reminded me of the "Old" Vegas before the megacorps took over. "Deals" sites marketing meals, parking, trips, though not those significantly underpricing products, could continue to have some viability.
    Since June 10, 2012 a vegan aarf but still writing the Hound Dawg Sports Blog
    "If you don't have time to do it right, when will you have time to do it over?" -John Wooden;
    "Raj, there’s no place for truth on the internet." -Howard Wolowitz[/SIZE]

  9. #7
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    Point taken, Hound..

    I would happily look for a deal on airport parking.. and here in Toronto we have something called Summer and "Winterlicious", where restaurants offer fixed price menus for a really good deal (to entice people to visit restaurants they wouldn't otherwise try). And, like anyone else, I'm always happy to find a good deal at a store... whether it's timing, or just a short-term promotion.

    It's the group mentality that I tend to stay away from... and the "barter" system (which I know can be profitable for some, but with what I do, ends up taking more from me than I get back!).

    My comments were more personal - but from a big picture standpoint, I'm still on side with Bill as to the future of the business concept.

  10. #8
    OPM and Moderator Chuck Hamrick's Avatar
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    Yes they are customer acquisition models but with a new business they wouldn't know their acquisition costs. I go to the local bagel shop and use a Groupon to purchase $10 in food for $5. So Groupon gets $2.50 and the foods wholesale cost is $5 (doesn't cover overhead). So customer acquisition is $7.5. If I get 200 people who come in with the Groupon that week I just spent $1500 to acquire them. How many will return?

    My wife sold a soccer tournament ad last year to a local burger place for $1500, tournament was four days and 10k attendees. He didn't want to spend that until he found out it was tax deductible as the tournament is a 501C non-profit.

  11. #9
    Affiliate Manager BretLiquidweb's Avatar
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    The Groupon model is brilliant in theory. The best way to make it work long term; Is to have a traditional coupon deal with Incentives. Example: Sushi: $25 for $50 of food. You can then come and login within two weeks of using the said coupon and order more. Where you can purchase $20 for $35 of food then $15 for $25 of food. That causes brand/shop loyalty.
    First thought is why pay more for less. Because their product is brilliant!
    Bret Hitchcock | Liquid Web Affiliate Manager
    800-580-4985 ext 2196
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