eDeal Association: Daily-Deals Industry Needs to Be Honest and Help Merchants to Fight Stigma

There are a lot of negative signs in the daily-deals industry these days:

• According to a Ipsos Public Affairs and Offers.com survey in October, just 12 percent of respondents said they used daily deals in the past 30 days, down from 27 percent during the same time last year
• According to Manta, 82 percent of small businesses will not run a daily deal this holiday season
• A survey conducted by Cloud 9 Living LLC found that 53 percent of small businesses in the tourism and hospitality industries across the U.S. report using a daily-deals site like Groupon, but only 3 percent report a significant increase in new loyal customers and just 14 percent report an increase in revenue in the six months following the promotion
• There’s word that LivingSocial is going to lay off as many as 400 U.S. jobs starting today, the first major round of layoffs for the company; this would put its $32.5 million tax break in Washington, D.C., at risk
• Groupon’s turmoil continues, as its board meets today to consider replacing CEO Andrew Mason

There’s plenty more where all that came from, but for brevity’s sake we’ll move on to what the daily-deals industry needs to do and what it’s future looks like. To discuss these topics, we’ve tapped Stavros Prodromou, director of the eDeal Association (eDA), which recently rebranded itself after operating as the Global Daily Deal Association. Below are Prodromou’s answers to some of our questions about the daily-deals industry:

How has the deals industry evolved in the past year?
The daily-deal industry is still very young, having grown at a phenomenal rate since it took off three years ago. Some businesses that tested the water had to close but others showed great innovation. We are now seeing the industry diversify, as many businesses expand and add innovative services, update pricing and add other channels like flash sales and social commerce to their business plan.

What is the biggest problem facing the industry, and what must be done to address it?
The main issue is the perceived stigma around the industry that has developed from either bad experiences or just negative press. When the industry launched, there were misleading or deceptive websites that entered the market. Along with some highly publicised cases, the cupcake incident for example, consumers began to distrust the industry as a whole.

Daily-deal sites need to be honest and offer better consultation with merchants, as the model is not efficient for every product. The association aims to help weed out those deal providers that have given the industry a poor reputation all the while keeping consumer protection at the forefront. The eDA aims to improve consumer confidence, but also to standardise practices across the industry and enhance its accountability and sustainability.

What have been the most notable or interesting trends the eDA has seen within its membership this year?
The most notable trend is the diversification of the industry. Many of the eDA’s members have begun to include additional ecommerce services to their offerings, which was motivation for the association’s rebrand. It’s exciting to see the sector evolve and develop, especially when there has been much discussion about whether the industry is sustainable.

What is the main message eDA is conveying to its members?
Our mission statement: to provide members with education, innovation and regulation to ensure the deals industry grows with integrity.

What do you expect to see in 2013?
I expect the industry to continue to diversify in 2013 as deal providers fight to survive in this competitive and crowded space.

By Jason Hahn