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Daily Deal Site Closures and Launches

It's been an interesting last month or two in the New Zealand daily deals market. In such a short space of time, there are been at least 11 sites come and go - most of them closures.

Here is what has happened:

Sites that closed down, or are not offering daily deals Recent Site Launches
1-DayCellar.co.nz RedAlert.co.nz
KidzGrab.co.nz Snaffles.co.nz
BizDeal.co.nz HugeBargains.co.nz
GetAgain.co.nz KiwieShop.co.nz

Site Closures

With all these site closures you might think they is something wrong with the daily deals market. Are customers not buying? Is there a downturn in spending? Our thoughts are that these closures are due to the individual businesses concerned, not any market factors.

These sites have all had at least 6 months to prove their worth. Some have failed in their marketing, some have not marketed at all. The buyers are out there, but if no one has heard of your site then you'll get no customers. No customers means no word of mouth, and no social media buzz. Business over.

There are several sites on the closed list that still have their site up, but say "closed for maintenance". Interesting! We'd say that these sites have given up, not that they are having technical problems!

The thing with any type of daily deals site is you need to be reliable. You can't do this, people need to be able to rely on your deal each day, so they get into the habit of checking the site. Once you lose peoples interest, they rarely return. Unfortunately these "closed for maintenance" sites are more or less gone for good.

Daily Deal Site Launches

But with the site closures, there have been 4 daily deals site launches! These launches have been for product deals sites, no group buying sites at all. It really does seem anyone can launch a daily deal product site. All you need is a website, and a few suppliers.

The risk is a lot lower than because you don't need the critical mass of businesses offering deals and customers to buy them, you just need to offer a good deal to even a small database and it will sell. If the deal doesn't sell well, you can sell the stock later, or on a e-commerce website. You can't do that with group buying vouchers.

Why no Group Buying Site Launches?

Group buying sites basically work as middle men, arranging the deal on both sides. You need to be able to guarantee a level of customers to businesses, and you need to be able to guarantee at least one deal a day to customers. Fail at either of these and you lose businesses, or you lose customers. It's a delicate balance.

While group buying and daily deals seem similar, they are two completely different businesses models. Sure they both use countdown timers and big discounts but selling vouchers, and physical products requires two different mindsets.

I'm sure that we will continue to see new daily deal sites launches into the future. The fact that anyone can start one of these overnight means there will always be someone willing to give it a crack. It's pretty low risk. But as for group buying voucher sites, the market is pretty well covered now. There really is no space for a new entrant, no matter how much money they throw into marketing.

Posted: Mon 20 Aug 2012


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