It seems that online daily deals are the rage. Groupon is the darling on the street now with its recent IPO. But are such online sites that offer deals with huge discounts sustainable in the long run?
What do I mean?
Think about the business model behind sites that offer online deals. It is based primarily on getting sellers to offer large discounts via daily deals to attract potential buyers to buy from them. In return, these online sites get a cut.
If sellers decide to stop offering their products, the revenue potential for the online site will surely be impacted which will in turn affect the long term sustainability of the site as the revenue is what is sustaining the business.
This is my opinion but there could be three reasons why sellers might decide to stop offering their products through these online sites.
- Profit potential is non existent with such deals as sellers have to offer large discounts.
- Such deals might not translate to loyal customers as customers are usually there for the discounts, not to be a long term customer.
- Time spent on buyers of these discounted deals translates into lesser time for loyal customers which sellers might not want to lose.
