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Sep 192011
 




Madness.

Sheer Madness!

As we’ve said often, this daily deal/coupon madness has reached epic heights in the U.S.

Perhaps, it’s because of the recession with fewer dollar bills in consumers’ wallets.

Perhaps it’s a greedy frenzy that’s consumed the people here into an orgy of consumption.

Or perhaps it’s clueless businesses desperately trying to get customers in the door through 50% off deals.

Whatever may be the reason, we were surprised to learn that even after the closing of 170 sites there are still another 360 daily deal sites in the U.S., according to deal aggregator Yipit (source: WSJ, 09/19/2011).

It’s easy to start a daily deals site like Groupon or LivingSocial but hard to match their prowess in getting tons of subscribers to sign up or listing plenty of deals to keep the deal-hungry consumers mob coming back.

Getting consumers to sign up is an expensive proposition. Without plenty of consumers, it’s hard to get businesses to sign up for deals. Lacking the deep pockets of Groupon or LivingSocial to invest on signing up new consumers, a lot of daily deal sites have gone bust.

We expect the shakeout to continue until there’s not more than two dozen daily deals sites left.

Not Good for Businesses

In our opinion, these daily deals damage the branding of the businesses and it’s unlikely that many of those who use the coupons will ever become loyal, full-price paying customers.

Our hypothesis is that many of the daily deal sites’ coupon users just move from one deal-giving restaurant/business to another.

Indian restaurants across the U.S. have now clambered on the Daily Deals bandwagon offering hefty discounts in a desperate bid to woo scarce customers. Continue reading »