The daily deals sector is flying high as one of the fastest growing industries around. In fact, the potential in this new market is the very reason powerhouse brands such as Amazon, Google and Facebook have decided to diversify their portfolios and join the party with their own daily deals services. The market is generating a lot of excitement now, but as we’ve been hearing through whispers in the wind, those days could be numbered.
Daily Deal Fatigue
In its report, U.S. Interactive Marketing Forecast, 2011 to 2016, technology and market research firm Forrester predicts that daily deals will eventually fold. Shar VanBoskirk, an analyst at Forrester and author of the report, is just one member of the company’s team who believes that the same consumers who are crazy over deals today will eventually grow fatigued and pull back.
Bad Deal for Business
Though an interesting outlook for sure, Forrester’s prediction really did nothing but echo the sentiments of various other observers. Among them is Utpal Dholakia, an associate professor at the Jesse H. Jones Graduate School of Business, an academic division of Rice University in Houston, Texas. Dholakia mentioned that he has witnessed a number of indicators serving as signs that daily deals could flounder, starting by alienating the businesses that participate by offering bargains on their goods and services. In his study released in June 2011, he spoke of how it could soon become difficult for Groupon and other players in the deals game to keep their users coming back.
According to Dholakia’s research, just 36% of daily deals customers spend beyond the value of the bargain at hand, while 21.7% of customers never even redeem the vouchers they pay for. This shows that some people may not be willing to spend much despite initially having a high level of interest. The report also revealed that 73% of businesses admitted to being willing to jump from one deals site to another, while less than 50% of businesses in the restaurant, bar, salon and spa industries said they would ever use such sites again. From these findings, it is starting to look like the lack of success is making daily deals ventures a one-and-done deal for marketers.
Only Time Will Tell
Is the daily deals market truly destined for a crash landing? No one can answer that question truthfully. At this point, things are going well in spite of all the doom and gloom predictions. Trends come and go, but for now, it is hard to see this sector doing anything other than advancing. One thing is for certain: If this market can’t continually appeal to the businesses that make it tick, it will fall sooner than later.