Here is an email exchange I had with an Australian deals site that pivoted away from the daily deals model. Note that, as I’ve said in the past, an upfront payment model encourages fraud from merchants who take the money and run.
Having read your commentary on Groupon, I must say that we agree. This space is a house-of-cards. We ran a business in the “traditional” daily deal model for approximately 6 months before coming to the conclusion that the space was unsustainable.
We have sinced re-spawned as www.twodollardeals.com.au ….. whilst we obviously forsake significant revenue in the short term, we believe our model IS sustainable and will ensure that we are a permanent feature of our merchant’s marketing strategies (rather than a one-off, never again experience). The merchant pays ZERO commission – they just have to put a good deal together.
It also benefits our members significantly – they get fantastic deals, only pay when they receive the service/product (not weeks or months in advance of redemption), get treated as cash-paying customers …AND, have the ability to refuse to pay if the service or product is not as promised.
Keep up the good, insightful work !
We previously traded as www.dealmonkey.com.au (we are currently converting this site into a deal and coupon aggregator).
ps. further to your commentary, we had four merchants do the “cash and run” job on us.