All discounted out

April 12, 2011 § Leave a comment

Groupon was a fantastic success story of 2010 and the anticipated IPO may well be a highlight of 2011.

The business is by all accounts tremendously profitable and clearly has a great business model.

But…, as a subscriber the Edinburgh daily deals email stream, I was struck by the feeling that it was overwhelmed by health and beauty deals, and as such, somewhat less valueable to me than I had anticpated.

Being an accountant, I decided to put some numbers on this. During the three months to December, I received 73 emails from Groupon. 52 of those (71%) related to offers in the Health and Beauty sector.

What did I take from this?

– Daily deal sites need to work at broadening the types of offer in order to maintain user interest/longevity

– There is an opportunity for niche daily deal sites to emerge (SecretEscapes.com)

Discount vouchers are increasingly used to generate sales (I can’t remember the last time I ate at Pizza Express full price!), but the businesses need to protect the perception of value, and constantly offering discounts definitely diminishes that.

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