Who Loses With Daily Deals

Being heavily involved in the daily deal industry, I always enjoy discussing the pros and cons of featuring a deal on a deal site with businesses who have either just ran a deal through one, or businesses thinking about running a deal. From each of my discussions, it has become obvious that one party involved in the daily deal seems to typically always lose. Over the holidays I was hanging out with a good friend who does floors and their business had recently just ran a deal through a major deal site. “The deal sold extremely well, the customers were very happy, our boss did really well and upsold a lot, but we had to work our tails off to keep up and it really stressed myself and all the workers out. We definitely lost on that deal and are not very excited for the next time our owner runs a deal, which is coming soon,” Trevor told me.

In this particular deal, the workers got the bad part of the deal. In other situations, the business running the deal fails to figure out their numbers correctly and ends up losing out by selling their product or service at to much of a discount. Recent studies by Rice University suggest that a significant number of businesses had lost money when using Groupon (32%!) and more than 40% said they would not partner with Groupon again. There are even horror stories of where merchants and businesses have shut their doors after running a daily deal put them in a very sticky financial situation. Many times, the daily deal website itself doesn’t end up working out and ends up shutting down.
And of course, many times the customer ordering the daily deal loses out and experiences buyer remorse, or even worse for them – never redeems their coupon. Any way that you look at it, it seems one party involved gets the short end of the stick. If a merchant properly crunches some numbers and works closely with the daily deal site, it is possible for all parties involved to win. Many and most times however, one party loses out.
I would love to hear how you have been affected by daily deals; for better or for worse.