What next for the daily deals?

Tue, Jul 3, 2012, 01:00

The phenomenon of regular offers steams ahead regardless of deal fatigue. So what can consumers expect to see in the future?

WHEN THEY WERE first launched, it seemed that not many of us could resist the lure of a daily deal offering an all-you-can eat platter and jug of beer for €20 or a cut-price beauty treatment.

Some 18 months on, however, deal fatigue has started to set in, with many of us now rueing such purchases as a voucher for teeth whitening that was never used.

But if the lustre is coming off daily deals, the phenomenon continues to steam ahead nonetheless – so what can consumers expect to see next? The other major challenge for deals operators is how to keep coming up with offers that catch people’s imaginations – and loosens their fingers to make them purchase.

New players

So far, the Irish daily deal market has been dominated by Groupon, LivingSocial and Megadeals, the offering from Pigsback.com, but there are plenty of other players in the space, such as Grabone and Rewarding Times, which is from The Irish Times.

And given that there are very few barriers to entry, the providers keep on coming. Facebook for example, launched its Deals product last year in the US and other regions including the UK.

The concept involved users getting deals in their area once they checked into the website using Facebook Places. However, after just four months of testing it pulled the plug on it, but you couldn’t rule out the social media giant looking to get back into the space.

Similarly in the US, internet giant Google – which previously tried to buy Groupon – has also moved into the space and has looked to differentiate itself by allowing users to customise offers. So, if you live in a certain post code in Manhattan for example, you will be sent offers related to your surroundings, while you can also choose the offers you’d like to be sent – so no tempting deals for teeth whitening then.

Here at home, popular parenting website rollercoaster.ieis set to launch its own daily deal site in mid-July, plumdeals.ie, in order to exploit its particular niche.

Discretionary discounts

While the daily deal model requires you to make a purchase first in order to avail of a discount, a number of new operators have come on the scene allowing you to download vouchers to your phone or to use when shopping online.

Vouchercloud, for example, allows consumers to access digital vouchers directly on their smart phone. It uses GPS to search out the deals nearest to you, so if you’re out and about and looking for a discount you can simply use the app to find a venue and then present the voucher on your phone to claim the offer.

Unlike daily deal sites, it has the advantage of not forcing you to buy something before you get the discount – which means no wasted purchases – but the discounts are not as significant as those you might find on Livingsocial.comor Groupon.comfor example. It currently has some interesting offers, such as 20 per cent off your food bill at The Market Bar on Dublin’s Fade Street, or two for one on summer drinks at Insomnia, but its range of discounts is somewhat limited.

Another new possibility is DiscountCodes.ie, which partners with online retailers that ship to Ireland and allows you to use a discount code to get money off purchases you wish to make.

So, if you know that Superquinn, for example, has a discount code which it offers to new customers to get a €20 rebate on orders over €100, but you have forgotten it, then you can find it on this website and use it to redeem your discount. The website also offers discounts from international retailers such as American Apparel and Urban Outfitters, but again, the range could do with being broader.

Mobile technology

For daily deal sites, the next big move is into mobile technology. Already, most of the larger daily deal sites such as Living Social and Groupon have developed mobile applications, allowing users to download apps onto their mobile phones which enable them search offers. Megadeals is set to launch its app within the coming weeks.

Some providers believe purchases from mobile may be bigger than desktop/laptop within two years.

Mark Henderson, general manager of LivingSocial in Ireland agrees. “Twenty per cent of engagement with us is now done on mobiles,” he says.

In line with this trend, location-based deals are seen as the way forward. This means that if you are on Dublin’s Grafton Street, for example, and are looking for someplace to eat, you can search – or be emailed – deals available in the area.

In the US, Groupon has already launched its “Now” product, while LivingSocial has its “Instant” product. However, such initiatives have been met with a mixed response.

“The jury is still out on that, although it is an interesting development,” notes Shane Hayes, chief executive of marketing specialist sift.ie, pointing out that this concept involves those offering the deals – which are often small restaurants and beauty salons – posting them themselves.

“One of the issues they have with the Groupon Now concept is relying on a busy restaurant manager to put deals on and off,” he adds, noting that the beauty of the regular deal approach, is that the deal provider does all this work for the client.

In this respect, LivingSocial has moved more in the direction of offering an instant ordering system for restaurants – so rather than wait to order your fish and chips, you can order online and simply drop by to pick it up. It is not in the companys “immediate strategy” to launch such offers in Ireland.

Shop till you drop

In China, six of the top 10 group-shopping websites have transformed themselves into online shops, in the belief that offering daily deals alone is not enough to sustain their business. And already there are signs that some of Ireland’s daily deal providers are also moving in this direction.

MegaDeals, for example, has recently launched its “Big Brand Box”, which takes a range of products offered by big brands, bought typically in supermarkets or convenience stores, and ships them directly. A recent deal was a box of Richie’s sweets such as Milky Moos which was on sale for €14.95, a considerable discount on the €40 retail price. The website sold almost 1,000 of this product.

Groupon has also had some considerable success with this model in the UK, having sold £1.5 million worth of mattresses last summer. It managed to do this by compressing the mattresses to make them much cheaper to ship. It now also sells a variety of products on its Irish website, including pillows and jewellery.

Also in the UK, LivingSocial has also launched a “shop” section on its website, through which it offers discounted products such as clothing and jewellery. While it hasn’t yet gone this far in Ireland - “Watch this space,” Henderson says – it has moved into selling consumer electronics. It recently sold more than 700 Nikon digital cameras for example, at the discounted price of €169.


* Xtra-vision sold 13,008 vouchers for a DVD or game rental worth €4 for just €1 (Megadeals)

* A two night stay for two at the Slieve Russell, Co Cavan, with golf/spa sold almost 1,400 vouchers at €189 (Groupon)

* L’Ecrivain restaurant sold out 100 vouchers worth €130 for €65 in less than an hour (Megadeals)

* Cineworld offered two-for-one tickets and sold more than 3,000 vouchers (LivingSocial)

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