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Once red-hot, daily-deal craze cooling fast

November 19, 2012

As the holiday shopping season gets under way, websites like Groupon and LivingSocial are facing the possibility that their daily-deal model may be dying, reports. The backlash against daily-deal or “flash” sites began last year, with consumers and businesses alike citing “Groupon remorse” — the feeling that in retrospect, the decision to buy or run a daily deal was unwise.

In a survey of small businesses, 82 percent said they “have not, and will not, run promotions with Groupon or other ‘daily deal’ sites this year.” Another survey found that merchants would not run daily deals because of high commissions and low rates of repeat customers gained through such promotions. Some merchants said they lost money on daily-deal offerings and that Groupon is less effective than other types of marketing.

Still, daily-deal sites have not disappeared. In a survey for the behavioral-marketing firm SteelHouse, 58 percent of customers reportedly said they intend to purchase gifts from flash-sale sites if the right products and offers are presented. Daily-deal sites are trying to adapt to a changing marketplace by expanding how and what they sell, reports. With its Toys section, Groupon is starting to sell products rather than just offer coupons. LivingSocial is also placing a greater emphasis on products, this year producing its first-ever Holiday Gift Guide. — Greg Beaubien


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