News: Why I Want Google Offers And The Entire Daily Deals Business To Die

11 July 2011 01:58 PM CDT

Excellent post regarding the daily deals space.  This article does a great job of discussing why the daily deals offers aren't necessarily beneficial for the businesses offering their products and services.  The short of it is that a business offers a massive discount and then shares the revenue associated with selling the deal with the purveyor of the daily deal.  What that means is that a $100 product gets marked down to $50, and then the business and the daily deal company split that revenue 50/50, so each gets $25.  That's a massive discount from the initial $100 worth of products and/or services.  Of course there is upside to the business, such as advertising, marketing, and reaching a broader audience.  However, that might not necessarily be as beneficial as once thought.  At least it might not be worth the revenue the business is sharing with the daily deals company.  For example, very few businesses (especially local mom and pop shops targeted by daily deals companies) earn loyal customers via price alone.  However, daily deals are designed to do just that - lure customers with ridiculously discounted prices.  Thus, this might not be the best use of advertising and/or marketing dollars.  Well, there you have it, my two cents.