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The Future of the Daily Deal Craze
By: Greg Dorn
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Who doesn’t love a great deal? As long as goods have been purchased, discounted items have transformed ordinary shoppers into monstrous, sale-seeking lunatics. People naturally flock to the reduction racks at their favorite over-priced clothing departments. A vacation without a package deal burns too big of a hole in our pockets. Events like Black Friday have become yearly traditions for consumers to scramble around their local malls like wild stampedes. Needless to say, we love saving money; we love saving money so much that we’ll buy anything solely based on the fact that it’s on sale. It sounds crazy, but it’s human nature. Daily deal services took advantage of this knowledge and created perhaps the most short-lived tech craze since the original Motorola Razr. And while companies such as Groupon and LivingSocial have seen their day in the sun, it appears the party may be coming to a screeching halt.
 
One can easily point to 2011 as “the year of the web-based daily deal.” Those very money-saving fanatics combing our malls welcomed a new way of cutting costs with open arms. On paper, the initiative made sense; why not take advantage of slashing 50% off your meal or avoid paying retail price for a pair of $80 jeans? Furthermore, since we remain glued to our smartphones 24 hours a day, creating applications that constantly showcase such opportunities was a no-brainer. The future appeared bright for this seemingly lucrative venture. Unfortunately, innovation couldn’t keep up with customers’ demands, desires, and convenience.
 
In essence, the masses became extremely annoyed and restless when their inboxes became filled with deals irrelevant to their tastes. After all, what does a 25-year-old man need with a coupon for a half-off manicure? Would a 14-year-old child really be interested in a discounted oil change? The answer is identifiably no. And so we became bored with the daily deal craze, ready to move on until they presented offers we would actually be interested in considering. Let’s also not forget the businesses partnering with such services. Most reported continuing trends of profit losses and a low rate of returning customers. No one seemed to be benefiting.
 
It goes without saying that this baby bubble might have burst in 2012–2013. The very public firing of Groupon CEO Andrew Mason made headlines as the corporation once again posted a net loss in 2012’s Q4. Since going public in November 2011, Groupon has posted only one profitable quarter, June 2012. As for LivingSocial, Amazon’s hefty investment in the daily deal powerhouse cost them $169 million in last year’s Q3
 
Deal-seekers tend to be a hungry, impatient brand of shoppers. If the likes of Groupon, LivingSocial, Tippr, or Yipit don’t adapt quickly, Black Fridays stand to get a bit more physical. Buyers beware!


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About the Author
Greg Dorn is a blogger, writer, and obsessed with everything technology and social media. Greg is absolutely captivated with the recent advancements in mobile gadgets, making our world more seamlessly connected. You can learn more about him on his own blog here
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