Last week was the Daily Deal Summit in New York. I always look forward to spending time with industry associates and building new ones. Thank you to Jay Weintraub for putting on the conference, for having us on the speaking panel and for being a most welcoming host. Here is my summary of what was discussed at the conference:
1. Daily Deal or no Daily Deal?
By far the most discussed topic, both on stage and in the halls, was the one about whether “Daily Deals” as a term still makes sense to describe this industry. First, deals nowadays have moved on from the daily time limit popularized by Groupon. Instead the average limit is between 3-5 days. Second, deals are no longer strictly for local deals. Rather, products and online goods/service have and will continue to dominate deal inventory. Other national categories like travel are also becoming the norm. As such, are Daily Deals a separate industry, or simply a feature of the much larger umbrella of eCommerce? More on this in an upcoming post. Take sites like Teambuy for instance. It is obvious by their types of deals and their website layout that they are positioning themselves as a destination online store for deals of all kinds. Dealfind, Wagjag, Groupon, Tuango and many others across Canada are moving along the same lines. Some faster than others. In the end, the larger sites will be competing with The shopping Channel, Overstock.com, Amazon and others as simply another shopping destination portal that offers deals. It is our opinion that one of the only things that will distinguish them from other ecommerce sites is the fact that they have local offers promoted, that they still offer great deals on local restaurants, retailers, and other merchants. Or atleast, let’s hope they still do.
2. Local or not?
Which brings us to the issue of Local Commerce? I see a separation of the “Deals” space. Different deal entities that will separate and focus on separate business models. Flash sales, Group Buying & Daily Deals, eCommerce deals, National or online deals, and local deals. We are in the process of writing a post simply on this subject. However, for this post, let’s first point out that many daily deal services are adding product inventory so fast and other online deals so often that the local flavour, the local focus of Daily Deals & Group Buying is starting to disappear. Now, it is normal that non local inventory would be added…it is MUCH cheaper to offer products instead of local merchants. Adding Local restaurants, shops, retailers, etc takes sales reps and a constant focus on closing merchant deals day after day, week after week and month after month. It is a sales business, it is focused on the need of the small local business, and it is expensive to scale. However, Local Commerce will never disappear as a need. Will never disappear as a market. There will always be local merchants seeking local consumers and vice versa. Those who continue to offer local shopping opportunities, be it through deals or otherwise will and can capture consumer attention.
3. Email effectiveness
Given the importance of email delivery to this industry and given the sizes of email databases that have been grown, a good portion of the conversation was had pertaining to email technologies, best practices, etc. Everything from email management, email deliver-ability, email A/B testing, and new emailing technologies that provide a better consumer email user experience. We will showcase some of these technologies over the coming weeks and months.
Although email was talked about most, other technologies also took a good part of the conversation. Technologies such as those enabling loyalty programs from merchants, from consumers; redemption technologies such as cardlinking services (none exist in Canada btw), better advertising acquisition tracking, eCommerce platforms for Deal businesses, scheduling for merchants, Data analytics for the Deals business, consumer shopping platforms, etc. We will once again highlight those that we feel pertinent to the Canadian marketplace in the upcoming weeks.
Yes, the summit was in the US, yes the market started becoming popular in the US, yes Groupon is from the US, however a larger percentage of sales in this type of business is coming from outside the US and this needs discussing. I was part of the International Panel and clearly, Latin America, Europe, Asia, Canada are all strong Deal geographies. It is very interesting to see difference in business practices among all these geographies. Where Groupon dominates the USA at over 50% market share, in Canada they only have about 23%. Where customer email acquisition costs in Canada hover around $6-$8 per email subscriber, in latin america it is a ridiculous $1 per email. That surprised even me. Where in some parts of Latin America, for instance, it is more effective to have the consumer pay the merchant for the deal as opposed to an online transaction to the Deal site. In turn, for Canada, you better have another online payment strategy other that Paypal, because they shy away from authorizing online payments for Daily Deal companies nowadays. There are also Daily Deal conferences in the UK, Australia and some others being organized in other regions.
6. PR disaster
The entire industry is in a funk. Not because of sales, but rather because of bad press and a bad reputation. Media and press mostly concentrate their posts and articles on merchant issues, on consumers not being happy, on high returns, on low margins and certainly on the nonsense revolving around Groupon every week. Groupon has become the poster child for bad PR and bad Mojo for this industry and it is hurting the conversation, it is focusing the conversation on negative situations as opposed to positive ones. I, for one, have had enough of this for Canada and we are taking steps with other industry counterparts to drastically improve the situation.
8. Banks and credit card
We are seeing banks and credit card providers enter this market in a far more serious manner. After all, they can provide an array of advantages that no other entity can. First, they have scale and reach tens of millions of consumers. Second, if they link offers to credit cards, then they can significantly reduce paper based and embarrassing redemption issues. Third, credit cards and banks are all about loyalty. The more they can keep consumers coming to them, the better. In Canada, however, credit cards and banks are a little behind in terms of their involvement. Let’s see if that changes for the remainder of the year.
9. Where are the Women?
That’s right. Hardly any Women, not only at this conference, but within the industry as a whole. Although I am not surprised to see a small number of Women participants or executives within technology sectors, it does surprise me with the Deals business; mainly because this industry is about Retail, it’s about marketing, it’s about consumer interaction. In the overall Retail industry, online or offline, Women are represented far more than within the “Deals” business. So hopefully it is just a matter of time before it improves in the Deals industry
Thanks once again to the Daily Deal Summit for organizing the event.