Pros and Cons of the Daily Deal Site Offerings

From Scott Walker of Greenward: Retailer experience offering 'daily deals' through Yelp and BuyWithMe - Read Scott's E-Mail

On the good side:
- For our two deals, considered in comparison to other advertising venues, it has been comparable or less expensive.
- If you need an influx of cash, these deals are one way to do it, as they pay you shortly after the deals are sold while you generally have them redeemed over several months.

On the bad side:

- Given the explosion in copycat deal sites (I get solicited from a deal site almost every day), I have serious worries about the implications of this model for small businesses. Especially in the case of restaurants and services like salons, why would someone ever go back to pay full price if someone else is always there giving them 50% off? I have encountered several people who have just that attitude and I can't really blame them. The more deal sites there are and the more people use them, the worse it gets for businesses. It's a downward spiral of "I can't compete unless I offer a deal, but I can't stay in business selling so much at 50% off."

- The deal sites offer almost nothing in terms of data, predictions, or tools to project the return on investment. I have had to make little spreadsheets to get an idea of the costs/benefits. It's not that hard to get an idea of what it costs per deal redeemed, but it's hard to know how many people were already customers of the store who just got a bargain, how many people were introduced to the store by the deal, and how many new customers will come back unless it's for the next deal we do. The terms of the deal are very important and can really change the numbers (the $ amount, the number of deals each person is allowed to buy, etc.). They offer little guidance on that front, no data to back up the guidance the do offer, and of course the deal site's incentives are not exactly aligned with the business owner's.

I am not sure we will do any of these deals again given my worries, and I can't really see how it is sustainable under the prevailing terms. I have a feeling that we are nearing the peak of the "daily deal" boom and that either the model will need to change to favor the businesses a bit more, or they will run out of businesses willing to participate.

Best regards,
Scott Walker
Co-owner/Manager
Greenward LLC
1764 Massachusetts Avenue
Cambridge, MA 02140