Why I won’t start a deals site.

Recently I came across many people who are working on daily deals startup. By many people I mean 3 groups of friends of mine, and of course, my another friend who interned at Alldealsasia, and through interacting with them, I found out many other deals site as well. There are the huge players in the primary deals market and other small players who tries to capture a piece of the marketshare, and there are emerging players in the secondary markets that aims to address the inefficiency of the primary market through resale of unused deals and coupon, as well as those that tries to disrupt the whole model by shifting the bargaining power from merchants to consumers.

Personally while I think that deals site are here to stay for a while, I think that it is a competitive market to be in. Yes the industry is a lucrative one, but ultimately as covered by many, the model behind it is not sustainable and that is why Groupon is facing some trouble right now. The model is easily replicable as well and there is a low barrier to entry.

And in the deals industry, the 2 main stakeholders are Merchants and Consumers. When you try to market the new deal site to them, its gonna be quite a challenge, because to them, its gonna be yet another deals website. And us humans have an innate nature of being loyal to a few websites. For my case, even though there are a lot of tech websites out there, I only read 5 main sites everyday, Penn Olson, e27, Techcrunch, Sgentrepreneurs and Mashable. Same thing for deals, of course I don’t use the coupons so I wouldn’t know but if i were sourcing for deals, I would only go for the few bigs ones and stick to them.

Naturally, if I want to look for deals (as a new user) I would intuitively Google for it. That said, all of the various deals website will also be fighting for SEO to be on top of the search results. Its gonna be quite nasty for a new player to fight with the major players who are funded to gain the top spot on Google search. I wouldn’t want to be in that red ocean.

Of course, this is a huge ocean. People love deals and to enjoy savings. Merchant want to get rid of perishable goods. Theres always room for more players, and with the new Facebook features coming out, definitely the model should adapt to it and we are definitely gonna see even more new deals site leveraging on that. But for me, i definitely won’t want to be in that competitive industry. Besides, I have friends doing it and I definitely don’t want to be their competitors. They seemed to know what they are doing. =)

Just my 2 cents.

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One thought on “Why I won’t start a deals site.

  1. Amelia

    Thanks for sharing your thoughts. You’ve shared so many other great articles – I think I’ll be spending quite some time here. 🙂

    I do find that this deal industry is tough, yet also an exciting one. Any industry would also have its challenges and competitors, I’m sure… and success is achieved when you overcome them.

    Reply

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