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Daily Deal Sites

Whenever a venture is highly successful, it invites competition. The more public that success, the greater the competition. This happened with the car companies in the early 20th century…and is happening now with so-called “daily deal” sites in the early 21st century. (Did you know that the sub brands such as Chevy and Lincoln were once totally separate car companies?)

Groupon is the market leader but LivingSocial is coming on strong. (I subscribe to both, although I am personally biased in favor of Groupon and take advantage of their deals more often.) In a Wall Street Journal article I read today, it stated that there were 530 “daily deal sites nationwide”. 530!! Wow. I had no idea. The article also stated that ~1/3 of them, or 170 sites, have been sold or shut down in 2011. That was fast! I thought most of them were created in the past 1-2 years. Talk about a trajectory!

Anyway, it looks like Groupon is having the same problem AOL had some years ago. Paying more and more for subscribers. Their costs incurred in signing up a new customer have nearly tripled in the past year. Yes, tripled. With greater competition comes higher costs. It also helps to have had a ton of venture capital poured into your coffers in the past year. You can’t spend what you don’t have. (Well, not quite true. My mother said she didn’t have any money but darned if she didn’t show off her new Kohl’s purchases. She had a Kohl’s credit card. So yes, credit allows you to spend what you don’t have.)

The concern is also that subscribers will get tired of getting numerous similar emails on a daily basis and subsequently, unsubscribe from the offers. (I mean, how many restaurant discounts can one take advantage of?)

The shake out in the daily deals market will continue. It’s inevitable. Sometimes the first to market prevails…and sometimes they don’t. I place my bet on Groupon.

WSJ article referenced: Get ‘Em While They Last: ‘Daily Deal’ Sites Dying Fast

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About Tiffany C. Wright

Hi! I,Tiffany C. Wright, am the author of the ebook, "Help! I Need Money for My Business Now!!" and the book "Solving the Capital Equation: Financing Solutions for Small Businesses", available on Amazon. I am the president of Toca Family Business Services, a short-term & project-based interim management & strategic and financial advisory firm, located in Atlanta, Georgia. In the past five years I've helped small and medium companies restructure and obtain over $31 Million in financing and a similar amount in purchase orders and contracts. I have an MBA in Finance and Entrepreneurial Management from the Wharton School of Business at the University of Pennsylvania and a B.S. in Industrial and Systems Engineering from The Ohio State University. Personal: I enjoy investing. I am a prodigious reader of everything from business books, magazines, and newspapers to horror and popular fiction. I read 4-6 books per month. I also love to travel. I've been to 33 countries on 5 continents and lived in Japan for 2.5 years and aim for a foreign locale twice a year. I am also an athlete and run track on the Master's Circuit. The highlight was placing 7th in my age group in the 2007 World Master's Track and Field Championships in Italy.

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The Resourceful CEO, Tiffany C. Wright

the president of Toca Family Business Services, a strategic and financial advisory firm which provides short-term & project-based C-level management. She is the author of Solving the Financial Equation: Financing Solutions for Small Businesses, available on Amazon.

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