Is Gilt City's BuyWithMe Purchase The Start of Daily Deals' Demise?

BuyWithMe homepage

BuyWithMe is now a part of fellow discount site Gilt City.

Beginning today, the discount site BuyWithMe is officially a part of Gilt City, which purchased the flailing company (they laid off half their staff last week) for $5 million.  As daily deals sites first proliferated, the question arose as to whether they would or could all survive.  Is Gilt City’s inexpensive acquisition of BuyWithMe — which had originally raised about $20 million in venture capital — the beginning of the end?

In all likelihood, it’s not the initial domino in the business model’s ultimate demise.  Instead, what the sale might indicate is the first big downward shift in the daily deals market, toward fewer of the businesses altogether — but not their total disappearance.  What we might end up with in the not-too-distant future is a more concentrated mix of the most prevalent companies (Groupon, LivingSocial) alongside smaller, far more specialized, and with any luck, profitable coupon sites (Goldstar, BTreated).

It’s been argued before that the daily deals market was getting totally oversaturated, and that some of the sites would inevitably shut down.  BuyWithMe’s fire sale might just represent the first disappearance of the model’s less successful players.