Forget hyper local: New deal site goes anti-local
DailyDeals.com is launching with strategy that shuns local and embracing national and e-commerce.
You're launching a daily deal site with a (slightly) new twist. You're sure it's the next big thing. Yet there are so many sites out there--384, according to Yipit, a firm that tries to makes sense of all these deals for consumers--and the press is already writing the people-are-sick-of-daily-deal-sites stories.
So what do you do to get attention? You launch the same week that the granddaddy of daily deal sites, 3-year-old Groupon, is going public.
The CEO and founder of DailyDeals.com, Steve Schaffer, says the timing for today's launch wasn't planned to be near the Groupon IPO. He and his team in Austin, Texas, have been planning for some time to launch this week. But if all the attention around the Groupon IPO puts the daily deal world in the spotlight, and DailyDeals.com can ride that wave, so much the better. "The press is clamoring for this story right now," says Schaffer.
Fine. I bite. So now how will DailyDeals.com standout amid all the daily deal noise? And why will consumers--weary of another daily deal site to sign up for and more inbox offers--be clamoring for DailyDeals.com?
DailyDeals.com--and let's take second to appreciate that sweet domain name, which Schaffer bought a couple of years ago for a price he won't disclose--is, in a sense, the anti-Groupon. All of its deals will be for national businesses or for e-commerce sites. So there will be no spas. No neighborhood restaurants. No, in fact, bucking the hyper-local trend among deal offers.
Schaffer argues that the focus on local has left a big opportunity, and that that the local market is in fact mature. The opportunity, as he sees it, is to create a streamlined company--no big sales force or copy writing team needed--that harnesses the power of traditional Internet marketing (that largely means email lists) and social media.
Facebook, Schaffer says, is more powerful for national or e-commerce offers since our Facebook friends are generally scattered geographically. Thus you'll be more likely to share a deal with your Facebook friends if it's something they can actually use.
DailyDeals.com's is rolling out with a deal for Zazzle, a site where consumers can make custom products. This deal is for $20 to $50 worth of holiday cards and, according to DailyDeals.com, represents a 60 percent savings. A new deal will come each weekday, and while Schaffer won't disclose which businesses are coming, he says to expect standard shopping offers such as home improvement stores, electronics retailers, and jewelry stores.
The business is part of Vertive, an 8-year-old firm that runs several consumer-oriented Web businesses that Schaffer says have taught him a ton about what works online. His other sites--including CouponCodes.com and Offers.com--are set up as affiliate plays: they send traffic to vendors, and then Vertive gets a cut. (DailyDeals.com is more than an affiliate play, with Vertive taking the credit card payments)
It's an old-school web model, known as performance marketing, and it lacks the pizzazz and sex appeal of startups companioned by the Silicon Valley set. But such businesses are often big money markers, and Schaffer says Vertive, with 50 employees, has been profitable from day 1. And a year ago Vertive took a $7 million investment from Susquehanna Growth Equity, a private equity firm. It's using the cash to expand.
As of now, DealyDeals.com doesn't have many direct competitors. Plenty of companies offer national deals, but most only do it on occasion. That's the case for Groupon, which in its amended S-F filed Tuesday with the SEC said that it would continue to focus on the local market, working with national merchants, only from time to time. Others, like the other biggie in the market, LivingSocial, take a similar approach. And there are sites such Amazon.com'sthat offers daily deals on a single product.
The bigger question is whether the whole frothy market for deal deals will fizzle. Groupon's upcoming IPO is, and it's easy to imagine more companies pulling out or scaling back their daily deal efforts, just as .
Yelp CEO Jeremy Stoppelman, in a blog post about cutting back his company's effort, cited a problem that Schaffer talks about to make the pitch for national promotions--that deals just often aren't local enough, and it's annoying to receive an offer for a restaurant that is actually sort of far away.
It's too early too tell how it will all shake out, of course. Even Groupon, which launched the category, is a super young company. But I wouldn't be surprised if one that survives, or even thrives, is a company like DailyDeals.com, which is avoiding the marketing flash and focusing on metrics and money without rushing to Wall Street for cash.