With daily deal providers filling column inches for all the wrong reasons, it’s a good time to take a step back and see where this fast-moving industry is heading. The next six months should see some interesting developments in the daily deal and voucher space, which will help separate the major players from the rest.
Breaking Point
We’ve seen a swell of discontentment building so far this year, as more and more consumers have voiced their disappointment at deals that have not delivered or lived up to expectations. With OFT rulings and an ASA clampdown, something has got to give. When it does, the role of an organisation such as the eDeal Association is going to be vital as it aims to provide one voice for the dynamic and currently disparate daily deal industry. A trade association is long overdue and will help to standardise approaches as the industry grows, which it will. Groupon’s stocks may be down, but the sector remains resilient and as lucrative as ever. Within the last few months alone we’ve seen big brands like Nectar and Amazon as well as niche start-ups such as MumsAndMe and DailyPetDeals kick-start their own daily deal sites.
As one of the founding signatories of the EDA’s Code of Conduct, I’m looking forward to working with the trade body to improve the industry’s accountability, reputation and sustainability. I see EDA membership as a way to restore consumer trust and demonstrate dependability and reputability as a daily deal provider. It’s also a great way to provide our customers with extra reassurance when they make purchases through DiscountVouchers.co.uk.
Industry Convergence
As the discount economy has grown, we’ve seen segmentation of the industry with businesses focusing on daily deals, online voucher codes or printable vouchers. While each has its own strength, the only way to stand out amongst your competitors in the long term will be to diversify and expand your business offering. With this in mind, I expect to see an increasing number of businesses providing more than one service and adopting a broader marketing strategy to survive in this crowded space.
Second Wave Consolidation
While diversifying is key to surviving in this fast-growing industry, businesses also need to create more strategic partnerships. Until recently, the focus has been on building databases of consumer contacts by acquiring email addresses, with acquisitions and partnerships underlining this. Stronger relationships must be forged between the different parts of the discount economy including technology providers, merchants and individual professionals.
At DiscountVouchers.co.uk, we’ve recognised the strength in strategic partnerships and are now an active member of both NimbleCommerce’s NimbleNetwork and GroupCommerce’s Marketplace. These networks encourage members to source and share deals with each other, opens distribution channels and drives additional revenue for deal providers. Deal sharing allows the myriad of deal publishers to compete with the sheer size of Groupon’s sales force.
Personalisation
The industry’s reputation has also been hit hard by the fact that consumers are fed up with the sheer volume of irrelevant offers filling up their inboxes every day. Daily deal fatigue has become a harsh reality and to prevent consumers from clicking on ‘unsubscribe’, providers need to be savvier. To avoid a diminishing database, businesses will have to invest heavily in their targeted approach and improve the data they already have to offer a more personalised service.
This has been my main priority since joining DiscountVouchers.co.uk, and we’ve successfully used our database of over six million users to provide merchants with incremental sales. We’ve invested heavily in our ‘Big Data’ project and now break down our data by age, gender, income and even ISP number to ensure we target the right customer with the right deal at the right time. By personalising our newsletters, we have also brought in additional revenue for our clients as our customers are now buying deals which they had not even considered buying before receiving the newsletter.
It’s clear to me that businesses need to start playing with their data to ensure profitability, longevity and a good relationship with new and returning customers. By running a detailed analysis of all the deals they run, businesses will soon see an increase in revenue and ultimately, happier consumers.
Fair Valuations
Much has been made of the marked reduction in Groupon’s share price. No doubt the drop has been significant but to dismiss an entire industry because of one stock price might be a bit premature. Groupon has been a trailblazer but its initial growth was unsustainable; its current valuation is a fairer reflection of the company’s growth, income and revenue. As with any emerging industry there will be teething problems but no one can question the massive impact daily deal sites have, and will continue to have, on the general e-commerce industry.
