Ex-LivingSocial Employee Foretells Doom For Daily Deals

LivingSocial deals

Business Insider sat down with a former LivingSocial employee, who chose to remain anonymous, in order to hear his take on the current state of the daily deals business.  Frankly, the prognosis isn’t so hot.  The employee, who worked as a salesperson for LivingSocial and now does the same job for a different, undisclosed site, told his interviewer that “I think a lot of people have purchased so many deals realizing they’re not going to use half of them, so they’re going broke saving money.”

Beyond what he sees as an increased reluctance from consumers to purchase discounts they might never use, merchants themselves are showing more savvy when it comes to the discounts they’re willing to offer — and this will eventually squeeze the margins for the daily deals sites.  Aside from the fact that it can be overwhelming for smaller businesses to receive cold calls from sales reps from dozens of Groupon imitators, business owners are calculating more carefully in terms of how they’ll agree to deals:

  • Dwindling are the days of unlimited deals.  More and more often, merchants will only agree to run a discount if they can cap the total number of offers to be sold.
  • Businesses are also far less inclined to offer a general special — say, $20 for a higher dollar value of any kind of food or product.  Instead, they prefer to let customers pay a discounted price for a set menu or specific type of service.
  • Blackout dates are new, too — restaurants and retailers, according to BI‘s source, are much more insistent on allowing discounts to be valid, for instance, only during certain hours or days of the week.

While he didn’t comment too much on the inimitable size of Groupon’s IPO, the sales rep being interviewed did note that he expected a lot of the copycat sites to disappear, particularly due to merchants’ new constraints on how and when they’d offer pre-paid discounts, if at all.  And with buyers having second thoughts as to the value of these discounts, beyond the mere social implications of using vouchers, this former LivingSocial employee seems like he’s got a good case building up for a possible daily deal implosion.

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