The press lately about the ‘fall of the deal space’ has been brutal but it’s no surprise that people love to hate the deal space.
Remember that popular girl in HS you loved to hate? Well, you had to find a way to deal with her for four years. The deal space is the same way. It’s not going anywhere – so you’d better learn to deal.
When Facebook announced they’re shutting down their deal business (as it is right now), the vultures started attacking. Suddenly, blogs everywhere were trumpeting that “the demise of the deal space is finally here.”
I’m sorry, it’s not.
Let’s break this down. Unemployment numbers are still dangerously high, and most people still can’t afford the luxuries of their pre-crash lifestyles. As a result, more and more businesses are going under. Need proof? Just walk down any street in NYC, and you’ll see firsthand the number of retail vacancies. People want to go out, but they just can’t justify spending the money they used to.
Enter the deal space. Suddenly, restaurants, tour buses, and spas are filled. They might not be making as high a margin, but they aren’t shutting down their doors either. And if you’re a business owner, you know that every day is important. Every open register carries hope of increased sales. And even if your business is packed with customers paying half price, that’s still better than a few of customers paying full. Empty restaurants and stores don’t pay the bills.
Once people saw that Groupon and LivingSocial were having success, they, too, wanted a piece of the deal space pie. It wasn’t long, however, before people realised that it’s not free money – that making a dent in the industry isn’t as easy as starting up a Groupon clone or sticking a link to deals on your site.
A lot of companies jumped in, and consolidating is now happening because it was needed. We’re just in the beginning phases of this industry. Once the economy recovers, people will be accustomed to using deals and saving money, so daily deals will be part of a lifestyle; the same way people use coupons to go grocery shopping.
Could Facebook have crushed the deal space? Absolutely! But they went about it wrong. Facebook Deals was never given the spotlight it needed to gain user attention. Also, coupons and vouchers are not why people come to Facebook, and it seems Facebook realised that. I have no doubt that Zuck has something else up his sleeve for deals. (My guess is integrating a system where each business page can run their own deal(s), and Facebook takes 30%)
So, please stop hating on the deal space. Please stop speculating that it’s dead because one company decides that it might not IPO or because it outgrew its CEO and might need a new one. People will always want to spend money, and they’ll always want to get more for less. Where there is demand, there will be supply.
The deal space isn’t dead, it’s only just beginning to find life.
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