Daily deal sites: Are they worth it?

Posted by on August 8, 2011

This spring, with flowers in bloom, the Real Florists Blog posted an article in response to Living Social and FTD’s Mother’s Day deal which garnered more than 100,000 purchases, including one by yours truly. The $15 for $35 worth of flowers seemed like a great way to save money on Mother’s Day, but the blog argued that using a big online service like FTD is actually a larger cost to the consumer in the long run:

“The Living Social Offer’s Fine Print:  The FTD service fee for flowers for Mother’s Day Weekend is $20.99 Note: This is not a DELIVERY fee. The ‘delivery fee’ (approximately $7) is bundled into the price of the florist-delivered flowers shown on the site. The $20.99 fee is just for forwarding the order to a local florist. So your $20 ‘savings’ goes to a $20.99 fee that’s totally avoidable.”

This got me thinking about the true meaning, and more importantly, the true effectiveness, of Living Social and other “local” deal brokers like Groupon.  While everyone from Business Journals to Facebook are jumping on the coupon bandwagon, do these deals really offer all that much value to the customer or the local business it serves?

I asked content marketing guru Jeff Esposito (@jeffespo) his thoughts on the the subject, and the result of that interview is listed below.

You mentioned that growth of the deal-broker trend could lead to coupon “noise.” Can you describe why? 

Predominantly these are deals from local retailers looking to grow their audience. When you see stories in the Washington Post and Wall Street Journal telling horror stories of these businesses [using a daily deal site and losing money] it hits a nerve. Everyone can relate to a corner business, the folks busting their humps to make ends meet. Outside of the monetary loss, they are losing human capital that could be used to run the business better.

My understanding is that Groupon and Living Social were both originally created to promote “local” businesses and communities by bringing customers into local businesses through one-time coupons. How has that shifted?

I think when you look at both online and large box retailers entering the space due to their ability to hit multiple markets with an outstanding deal for foot traffic, you lose that truly local feel. Their success has also caused a number of “me too” companies to pop up hitting certain segments and markets. This can be overwhelming for both business owners and consumers because how many deal sites can we truly have?

What are some tips for customers and businesses to avoid falling prey to an @LivingSocial or @Groupon #Fail?

The biggest thing from a consumer standpoint is to [find deals from] businesses you like and would frequently use. I prefer the half-price hook-ups for businesses that I know I am going to like and don’t go out of my way to hit up a new restaurant just because of a deal. Businesses need to do their research to see what fits them best. There is no glass slipper to marketing deals, what works for Joe’s House of Pizza may flop horribly for Pablo’s Pizza Pit. They also need to know how to say no. Just because something is hot and everyone’s doing it, does not mean that you need to do it. Just think about what your mom used to say about jumping off a bridge.

Jeff Esposito
Twitter – @jeffespo
Facebook – http://facebook.com/jeffesposito
LinkedIn – http://www.linkedin.com/pub/jeff-esposito/7/816/7b8

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