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Daily Deals not to blame for Business Closure

Last month Brian Megaw from RiverValley.co.nz published a blog post blaming the daily deals industry for a local horse tour business shutting down. The horse trekking business wasn't his own business, but apparently was a well known business in Rotorua.

The business which is unnamed, and the owners (also unnamed) blame a few separate factors for their business demise, but their main reason for their business failing was daily deal sites.

Now, back up the truck here. I have to totally disagree with this statement. The fact that this business needed to run a deal in the first place meant that they didn't have enough bookings to begin with. Surely the the real sign why the business failed was lack of marketing.

In terms of running a deal you are getting all these new customers, all this money, that would have never come through the door otherwise. Yes, the deal would have been at a discounted price but if you don't like the deal terms and paying a commission, then don't sign the deal. Simple.

It seems as if the owners, with their business in a bad shape thought that running one daily deal would turn their business around, like a magical fairytale. Running a deal probably kept them afloat longer.

It's unfortunate we don't have more details surrounding this case to analyse. Perhaps they never even ran a deal themselves, they are simply blaming the changing market for their problems.

Did daily deals offerings in the market mean that there were less horse trekking bookings to go around. I don't think so. If anything, a daily deal results in more bookings and more spinoff demand from customers telling their friends about their great experience.

The daily deals model puts focus on an activity in front of thousands of people for the day it runs. Each day is different, and a large percentage of those who buy the deal may not have even considered going on a horse trek in the first place.

But when an interesting deal is placed in front of them, at a healthy discount, this is enough to drive an impulse buy, no matter the type of deal.  I would say that very few people are actively "waiting" for a horse trekking deal to appear on a deals site. I'm sure they only happen once a month, if that. So the odd horse trekking deal wouldn't be creating a massive "bargain hunters" market.

One horse trekking deal or even a few deals would have been run over a few days of the year. Hardly a decent length of time to shut a business down. Are they suggesting that everyone who was considering a horse trek in Rotorua saw the online deals and bought them, instead of booking directly?

While daily deals are mainstream now, not every potential horse trek customer is going to buy a daily deal. Some will still book using the internet and telephone and be totally unaware of the online deal.

And then of course we come to the moot point: How can a tourism business not survive, in arguably NZ's largest tourism market Rotorua? International visitors are not going to be clued up on local daily deal sites, they are going to book through local tourism agents and online.

If the business failed due to lack of bookings (which would mostly come from international and tourism markets) then it is a marketing issue. To blame the business failure on a handful of daily deals run on a few separate days of the year for this. Crazy.

There are a million reasons why a business such as this may have shut down, with most of them coming down to management and marketing.

By saying that Daily Deals were the cause of the business failing they are saying that there was so much demand for horse trekking in Rotorua that most of the customers chose to buy a discounted deal, instead of booking directly. Then this is a simple case of marketing. People wanting to trek, but not knowing about their business, or not seeing the value in spending a higher price.

I normally try to avoid being critical, as I always like to be positive in most situations, but this blog post and the implication that daily deals are to blame for a single business failure is completely ridiculous. Perhaps there is more to the story, but from the facts outlined, it seems marketing, not daily deals are to blame in this case.

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Posted: Tue 31 Jul 2012


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