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Why I Want Google Offers And The Entire Daily Deals Business To Die (techcrunch.com)
50 points by amduser29 on June 11, 2011 | hide | past | web | favorite | 15 comments

I think of Daily Deals as equivalent to payday loans.

A lot of small businesses have cash flow issues. Daily deals sites propose to give extra liquidity in exchange for something your business is already offering. Seems like a great deal until you realize that the fees are egregious. And daily deal site fees ARE just as egregious, but they do a better job of marketing themselves/their fees.

Running a daily deal is great for a lot of businesses, but in many cases the cost to the business is much, much higher than advertised.

Current daily deals make the cash-flow situation worse for small business. Public information suggests that the merchants are paid somewhere between 30 to 90 days after the deal has run. While this is normal for B2B relationships, in the past those merchants were involved in B2C where they were paid up front.

I don't need them to die, but the whole daily deal fad annoys me. I feel like it's making people into boring, decadent, consumerists who can't think of something fun to do that doesnt involve a monetary transaction.

That's my current pessimistic view at least.

Yeah, I agree. It was fun at first to try out different places at low cost. But after doing, I've learned that it's really not a great way to discover unique experiences. As of late, I've been using an occasional deal as more of a reprioritization to which new thing I do first. That is, say, a new restaurant I've already planned on visiting. So it's still nice. But the fad is getting pretty old.

My experience is that I buy a groupon for $10 and then I spend about $25, so the merchant gets $5 from me and $5 from Groupon for -- usually -- a restaurant meal for one. The deal gets much better for the restaurant if two people come to eat.

Meanwhile I get to know a new place, and the server gets a $4-5 tip. That doesn't really seem to bad for the local merchant who otherwise would never have grabbed my attention. I bet the salons and day spas that make up most of the offers (restaurants are second) have ways to up-sell and do even better.

I also wonder if other grouponers are, being mostly new customers, also coming at low demand times. If you come for a discount at the peak hour, that would be bad.

Oh, Phil Greenspun has written on his blog about good experiences selling through Groupon. http://blogs.law.harvard.edu/philg/2010/03/19/groupon-market...

This article reminds me a lot about the Amazon Android App Store. Amazon is expanding its reach at the expense of many developers by giving deep discounts on their apps. Many times the developers agree to temporarily give their apps for free in the hope of acquiring more customers but what they end up acquiring is more bad reviews from customers who do not really care about the product and feel entitled that everything should be for free.

As the author of this article does, I explain how Groupon and other daily deal sites work to anyone who mentions using them. Many people I've told feel something close to shame for using them — and stop. The people who don't are the last people in the world a business would want as customers.

>Bad for business

Bad for those who were already profitable and could not make much out of the deals. Not for those who were alienated in some part of the city and got the kick-start just because of deals.

>Bad advice

While the link posted by author http://blog.agrawals.org/2011/06/06/best-practices-for-busin... gives some great advice, the allegation on Google asking the merchants to tell their customers about 'Google offer' more and more does sound true.How does the advice for posting lots and lots of photos and a blog post relate to telling your existing customers about 'Google offers'!

If the daily deal model is so bad for small businesses I would think more would speak up about it.

I've only come across a few "horror" stories so far.

Its simple math:

Groupon wants you to give them your product for 75% off, they sell that product for 50% off and keep 50% of the revenue.

Its fucking retarded. My friends in SF that own lots of businesses refuse to work with groupon - its a horrible deal.

I don't think it's really that simple. Here's their business model:

a) The customers sign up for those offers for free, and can buy certain things for less than the normal price. b) The business owners will lose a percentage of a sale (they might have never made) and in exchange get new customers to check out their place (who, if they like it, will come eat there again.) Instead of spending money on advertising, this is a pretty sure way to get people visit your restaurant. c) The "coordinator" gets a cut.

So, ideally, it's really a win-win situation for everyone involved. Also, I don't think it helps to dismiss the whole idea up front as "its fucking retarded."

Groupon seems like a better solution for small businesses than advertising in a newspaper (pre-craigslist).

If the author is looking to make a point about daily deal services why reference Google and not the 800 lb gorilla that is Groupon?!

Because he's disappointed they've entered this market, are also taking big fees and encouraging daily deal 'best practice' that are actually bad when running a daily deal.

It seems his point is that when it was just a bunch of random startups, it was obvious that this was a shade-ball kind of business. But now that Google is in the space, it makes the entire concept seem legitimate.

(FWIW, I disagree with this, but I think it's what the article is trying to say. My thought on this is, "if the only way to get someone to come to your business is to give them free stuff, what's the point?")

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