Thought I’d do some liveblogging of Jim’s talk at ILM East.
First a couple of Deal-a-Day forecast nuggets from Bobbi Loy-Luster
Volume will increase but growth rates will taper off.
$873MM in 2010 daily deal revenues
Low forecast = $2B in 2015. High forecast=$6B.
Now to Yipit:
Yipit aggregates daily deals from a variety of providers. About a month ago they started selling data.
Yipit has found over 400 daily deal sites which means there are low barriers of entry.
TravelZoo and OpenTable – public companies whose market caps have gone up substantially partially thanks to daily deal initiatives.
There are high barriers to scale. If you have a bigger list, you can sell more deals, and spend more in marketing and sales in a virtuous circle.
Now showing the Daily Deal Stack slide:
Moran thinks the biggest opportunity is in Merchant Services.
Top 20 Markets for Feb 2011:
Groupon offered 2116 deals and sold 730 for $39,007,032 revenue and $18,584 per deal.
LivingSocial was #2.
DealFind in Toronto was the top February offer. The Butchers offered 69% off. sold 11,404 and DeaFind got $600K in revenue.
Hair removal is the most revenue generating category
Food & Grocery is #2
Most frequent offers tend to be lower generating because more consumers will find the interesting.
Major players price offers for either volume or revenue. For example a $1 movie ticket will generate a lot of volume but not much revenue.
Breakage rate is <= 20%. As days since promotion gets longer the more deals get redeemed, but initially the breakage is around 45%.
Profitable at 19% Retention – I need to get that slide.
According to a Yipit phone survey of 80 merchants from summer 2010, 93% said they would do another daily deal, 43% said they will shift ad spend from current channels to daily deals.
The biggest surprise is that LivingSocial is closing in on Groupon and new players were able to come into markets and do well.
Location is a big driver of retention so that as personalization increases and deals get more targeted to your location, retention will increase. Everyday services like hair salons seem the best candidates for this.
5 Response Comments
Thanks for sharing this info Andrew. Can you blog about the best tactics to convert one-off deal buyers into repeat, loyal customers?
From my discussions with various SMBs and providers of other daily deals type services, it seems like the key is knowing how to message these new customers both during and after the promotion. Even Groupon will tell you that a big part of their focus has switched to working with SMBs post-promotion to create better retention.
There is a big opportunity for services such as Closely and JoinLocal that focus on creating ongoing social/commercial interactions between merchants and their customers.
Next up… offer disintermediation.
Thanks Andrew.. exactly what I was looking for… this will go perfect into a slide deck… BTW- Picture 7 is missing a hyperlink to expand.
This is a great post Andrew. Is it possible to get permission to use some of your slides with credit of course?
This is exactly what I was looking for. Thank you for this great post. I recently joined another Groupon alternative daily deal site called the The Customer Advantage (TCA). At the core they are like any other daily deal site (as far as offering 50-90% off deals), but this one also pays their free subscribers back 5% for purchases done by their referrals. So, I initially joined them for the daily deals, but quickly realized the lucrative ongoing residual income opportunity with this company. So, I am trying to promote this company to all but especially the small businesses.
What I noticed during this process was that some businesses actually have a negative prejudgement against Groupon deals but your data was very helpful first of all, for me to understand so I can relay to others that this is indeed still a growing business and a profitable one. Ofcourse TCA brings further more the opportunity for the business owners to benefit from the referral network income as well and that helps a little bit to put their worries at ease, but I was thinking if I could utilize some of the slides you have here, would be a great big help for me too, to present this business models to Small business owners who are more skeptical.
May I please have your permission to use the info you provided her for my personal use (with credit ofcourse!)?
Again, thank you very much, this was a very well put together post.