The “What If” Daily Deal Game

As the year progresses and as the industry matures, there are many changes that occur. There are many changes that the industry can expect over the coming 12 months. Some surprising, some expected. By the end of this year dozens of the 150 or so deal sites in Canada will have closed down, sold or merged with others (not surprising given the economic realities of the business model and its maturity level). This is already happening. Some larger and well known deal services in the country will also consolidate. Most media companies in Canada will have their hand in the Daily Deal cookie jar. Daily Deal startups will significantly slow. We have already seen a slow down in the past 4 months. The majority of present deal sites will provide product deals. Several Deal sites will mature into full blown ecommerce stores and some will actually start warehousing and importing products themselves. There are other anticipated changes and we will write about those at a later date.

For this post, let us examine some scenarios not necessarily based on fact, truth or evidence. Rather more based on rumor, opinion, hearsay, innuendo, etc. Let’s call it “WHAT IF”: (ps, some may actually be right on target)

 

The WHAT IF Daily Deals Game:

(The following are based on opinions, rumors and just for laughs. They are not based on any inside information legally or illegally obtained.)

WHAT IF…   Of the top deal sites in the country, Groupon, Dealfind, Wagjag, Tuango, Teambuy, Living Social, DealoftheDay, Travelzoo, Buytopia, swarmjam, dealticker, stealthedeal some would dissappear, be sold, merge. The likelihood of this happening is high. What if Groupon buys Teambuy or Dealfind, what if they buy Wagjag? What if Living Social buys Dealoftheday or Buytopia? What if Buytopia, Dealticker and Swarmjam merge? What if Stealthedeal buys Dealticker and a bunch of other smaller players. The only thing I am sure of in Canada is that Groupon, Livingsocial and Travelzoo will not disappear from the county. Everything else is up for grabs and has the ability of being sold, merged or other. By the end of 2012, probably 3 or so of the list above will likely no longer exist? How does the Canadian competitive landscape change as a result?

WHAT IF…  rDeals from Rogers actually gets it’s act together and delivers better deals, more deals per location and better distribution into their millions of mobile, online and digital audiences? Better yet, what if rDeals actually bought an existing Deal service that was already successful, already had a team that is hungry at sales and is proven in the eyes of merchants. This acquisition can then be distributed into the millions of customers that Rogers already has given this newly acquired site a distribution they could not have gotten on their own? Who should Rogers buy: Let’s see, my top picks taking into consideration costs and a nimble team means they would need to buy a smaller site or a set of smaller sites as opposed to the larger players. I would not recommend that Rogers buy any of the top 4 Canadian deal sites: Dealfind, Wagjag, Teambuy or Tuango. For the simple reasons that they are too big and they would be better off outside of Rogers. I would therefore recommend that Rogers look at a successful site across Canada and another across Quebec. To date, there isn’t one deal site that is successful across the country AND also successful in Quebec other than the top sites (Groupon, Teambuy, Living Social, Dealoftheday, Dealfind……Wagjag is not in Quebec and Tuango is not in the rest of Canada, Swarmjam does not do that well in Quebec nor do others that are national). So who would I recommend?  I thought of publishing the names of the companies I would recommend. I changed my mind, that would piss off too many people and would not be fair. Instead, if someone from Rogers is reading this, then contact me and I will tell you personally.

WHAT IF… Tuango decides to take their operations and expand to other cities in Canada? Tuango is one of the most successful Deal sites in the Country and a leading one in North America when it comes to certain metrics (growth, sales to subscriber ratio, profitability, among others) Can they add to their success in Toronto, Vancouver, Calgary? Should they? It is public information that Torstar owns a minority stake in Tuango. Torstar also owns Wagjag. Wagjag stays out of Quebec and Tuango stays out of the rest of Canada. Seems like a plan that has worked for both companies. So although the idea is intriguing to think about, it is most probably not a strategy to bet on.

WHAT IF… TUANGO, WAGJAG, and JAUNT merge! Now this one is certainly fun to think about.  Given Wagjag’s numbers, Tuango’s and Jaunt’s,(Jaunt is owned by Torstar also)  if they merged, then they would probably be neck and neck with Groupon as the country’s top Deal site in terms of revenue numbers and most certainly pass Groupon. Again, fun to think about.

WHAT IF… Groupon actually operated their Montreal operations under their US headquarters of Groupon as opposed to their France headquarters formerly of CityDeals? This dividing of the country has rendered Groupon.ca and its Quebec based operate to be second fiddle to their main Groupon.com operations. Their Quebec operations are always behind what their Chicago head office is doing. Be it in mobile, Groupon NOw deals and certainly user experience. The web sites are not the same, there are no Groupon NOW deals on the Groupon.ca website, users cannot even select another Canadian city other than those in Quebec and their Mobile app does not show Montreal based deals or NOW deals. Their PR and Marketing operations are different for Montreal than the rest of the country, which is ludicrous and shows a very inexperienced Management team from their US operations. Bottom line, Montrealers and other consumers in Quebec are not receiving the full benefit of the Groupon experience and Groupon’s Canadian operations will never be maximized and never leverage the full potential of the country if the entire country (French and English) is not managed by the same team. be they in Canada preferably or from Chicago HQ….but not seperate entities from Chicago and one from France. Just ask other top brands in Canada that have come from the US.

WHAT IF…Jaunt.ca sells to Travelzoo? Would Torstar sell Jaunt or even TravelAlerts to Travelzoo? I doubt it, but this post is about What Ifs. If it were to happen, then Travelzoo would further cement its dominant position in the country as a promoter of Travel deals.

WHAT IF…  PostMedia or Torstar or Sunmedia launches an aggregator? In my opinion, they should. An aggregator would allow someone like post media to promote deals to an already existing audience…an audience that is going somewhere else to find deals and certainly not going to Swarmjam in large enough numbers. Consumers wants deals…so give it to them. Be they yours or others. Providing a distribution of all deals will keep audiences on PostMedia’s properties, probably attract more consumers, Postmedia would generate more clicks and views thus advertising revenue increases, they would generate commissions from the deals bought thus extra revenues generated and they could probably promote Swarmjam deals to a larger audience as well. Postmedia, Torstar, Sunmedia, BellMedia/Sympatico, Rogers, etc, the larger media companies should ALL have a deal portal that show all deals. It just makes business sense to do so.

WHAT IF… Some Deal sites mature into full blown ecommerce deal stores? If Deal sites mature into Overstock.com or something similar, should they still be considered Daily Deal business? Probably not. There are a number of deal sites in Canada that are looking a lot like an online store and will slowly mature into including a shopping cart. Some Deal sites, no names will be mentioned, have agreements with importers or distributors to offer a product on the deal site as a daily deal but the distributor must launch a consumer facing website of some kind in order for it to seem that the deal is coming from an online destination. These so called stores are nothing more than a basic page or two that was put up by the distributor or the Daily Deal site itself in order to accommodate the expectation of an online store. It is quite obvious that no such online store exists though and Deal sites should simply sell the products themselves and provide the customer service and support required.

WHAT IF… Merchants stop promoting through deal sites? Well, this will not happen. It may slow, there may be less merchants, there may be different merchants. But one of the staples in any industry is the need to promote a business and small businesses, retailers and merchants need to promote themselves to acquire customers. Their options are traditional media which is very expensive and does not produce a solid ROI. There is online advertising, which has a better ROI but also very pricey, there is social Media which is much less expensive, but takes more time and knowledge and there are promotions and distribution methods such as Daily Deals which are inexpensive, have a measurable ROI but require good management and understanding of costs. Any time a promotional vehicles is available to merchants that is low cost and can attract a large enough audience to make an impact on customer acquisition, it will be utilized. So we do not see any research showing us that merchants no longer want deal marketing. Rather they want better deal marketing, better terms, better revenue share, and better tools to manage the campaigns.

WHAT IF…   Consumers stop buying Daily Deals and the industry tanks? Sorry, this will not happen. The one thing constant in this industry is that consumers love deals and will continue to buy them. 50% is a huge deal and consumers will never shy away from this. As long as deals are offered on products and services that consumers actually want, then Deals will always be bought just like promocodes and coupons are always used online. The question really is who will be the leading providers of deals to consumers. That is the question. Consumers will always want deals.

 

Do you have any What Ifs to share?

1 Comment
  1. hmmmm pretty hard to predict the future for sure, but this business model isn’t going away soon. There are so many new players coming through that fall in love with the concept. You’re right though, there will surely be lots of big fish gobbling up the little fish