Have daily deals had their chips? The question is raised by a hard-hitting front-page article in the New York Times this weekend. The Internet coupon fad is "shrinking faster than fat from a weight-loss laser," said the Times .
A spa director spelled out one of the problems: Coupons brought in women " eager to see their bulges melt and their wrinkles removed." Once.
“Then they would get another coupon and go do it with someone else,” said Wellpath director Jennifer Bengel. “There was no loyalty.” Just a few months ago, said the paper, the biggest deal firm, Groupon - less than three years old - was preparing to go public at up to $30 billion. Hundreds of copycat coupon sites had also sprung up. "Now coupon fatigue is setting in. Groupon’s public offering has repeatedly been put off and some analysts say it may never happen. The copycats are closing or merging." Internet giants Facebook and Yelp who had big plans for deals, have backed off. The Times pointed out what it called a basic contradiction at the heart of the daily deals industry on the Internet. "The consumers were being told: You will never pay full price again. The merchants were hearing: You are going to get new customers who will stick around and pay full price. Disappointment was inevitable." Some entrepreneurs were questioning the entire premise of the industry. Last December, Google offered $6 billion for Groupon. They said No, believing it was worth much more. By the time Groupon issued its financial documents in June, the shine had gone off. "Contrary to what the company had maintained, it was not profitable in the traditional sense. Eighty percent of subscribers to Groupon’s daily e-mails never bought a deal."
The Times told of a hair studio that did a promotion with a deal company and ended up begging it to stop running the ad. “I said, ‘No more. We don’t want your clients,’ ” said the salon’s manager. Another issue: the popularity of the coupon sites fed a relentless bargain-hunting mentality among customers that did not use them. The Times says merchants do get some benefits. "Deals increase brand awareness, and of course there are some consumers who do indeed come back again at full price. "But the cost is high: most coupon sites offer deals at 50 percent off and then take half the money the customer pays, sending the other half to the merchant."
