Why Daily Deals Are Becoming A Raw Deal
June 03, 2011 at 14:59 PM EDT
In the wake of Groupon's IPO filing, it's worth looking at the fundamentals of the offer. Growth numbers to date have been phenomenal . But is it a business that can last? We love daily deals for a simple reason: the deals have been outstanding. If revenue growth in the first Internet bubble was about selling a dollar for 50 cents, growth in the daily deals business has been about getting other people to sell their dollars for 50 cents and charging them 25 cents for the privilege. The deals have been embarrassingly good. I used the first Google Offers deal at Floyd's Coffee yesterday. For $3, I got $10 worth of food. Let me tell you, it's really hard to spend $10 in a coffee shop. I got an order of red beans and rice, a Mexican Coke, a doughnut and a chocolate chip cookie. The total came to $9.95. That's a great deal for me, but it's unsustainable for the business.