Daily deal sites seem to be popping up left and right these days. Heck, in June we counted over 300 sites offering discounts on anything from laser hair removal to skydiving.
Well, it looks like we missed a few. Since data from daily deal aggregator, Dealmap, shows that more than 450 deal providers are currently roaming the wild.
Don’t be fooled by sheer volume, though. Four hundred and thirty of these sites only lay claim to 20% of the business.
Companies like Groupon, LivingSocial and Google (Nasdaq: GOOG) are the real players running the show.
But as an ex-LivingSocial employee recently told Business Insider, we’ll soon see an “implosion and a major shakeout” in the coupon industry. So it looks like these players will need to step up their game.
And that’s exactly what they’re doing. Here’s how…
Let the Buyout Battle Begin
While the minor leaguers in the industry quarrel over table scraps, the big guns in the space are on an aggressive buying spree.
A 451 Group M&A KnowledgeBase report reveals that acquisition activity in the industry is up 700% year-over-year. And much of this activity is coming from the three big spenders.
~ LivingSocial: The company recently acquired Ticket Monster, one of the largest daily deals sites in South Korea.
The move puts pressure on Groupon’s South Korea division, and also expands LivingSocial’s presence in the region. Through previous acquisitions, it already operates in Thailand, Indonesia and the Philippines. According to All Things Digital, “Once the deal is approved by South Korean regulators, LivingSocial will operate in 23 countries in total.”
~ Groupon: According to All Things Digital, “Groupon is by far the most active acquirer, responsible for 20% of transactions. The company has purchased nine competitors in Australia, Indonesia, Singapore, India, Japan, South Africa, Israel, Russia and Chile.”
It also just teamed up with location-based social networking company, Foursquare. The partnership connects users to deals at locations they check into using Foursquare’s application. That’s definitely a smart move for Groupon, which has so far lacked an edge in social media.
The $100 Trump Retirement Roadmap
Trump is set to unleash a $11.1 trillion tsunami in the markets…
Now that he's officially taken office, dozens of tiny firms could skyrocket by 100%, 300% and even 721%.
This is your chance to turn a small stake of $100… into a life-changing fortune.
Click here to find out how.
~ Google: Although not technically a top dog in the deals space quite yet, I’m convinced that Google’s Offers platform should quickly gain traction once it launches nationwide. The search engine giant has been ramping up efforts lately to ensure the service hits the ground running.
Case in point: Google just acquired Dealmap – the deal aggregator mentioned above. Essentially, Google absorbs two million active users, 85 million monthly visitors and over 150 affiliate agreements with local deal providers.
Dealmap also comes with a unique platform, which allows users to view all the offers in their area on a map. And, the company’s DealExchange service makes it easy for businesses to promote offers and coupons while providing access to its massive deals inventory.
So not only does the purchase give Google an existing subscriber base, but also a platform to hook up with local businesses right out of the gate. Not a bad advantage…
Google Aims for the “Social-Mobile-Local” Trifecta
You see, local businesses are now learning how to negotiate more favorable terms. Especially when it comes to the revenue split.
Lately, businesses are demanding 80% to 85% of the revenue instead of the traditional 50%. Plus, they’re insisting on caps to limit how many consumers can purchase the deal.
Needless to say, this could put a damper on profits going forward.
Ultimately, it’ll be the company best prepared to adjust to industry changes that will prevail in this three-way battle royal. And that’s where Google has an edge.
It has an exploding social media presence with over 20 million Google+ subscribers, a burgeoning Android smartphone platform with mobile payment integration on the way, and superior payout terms for merchants with Google Offers.
So as Google tightens its grip on this “social-mobile-local” trifecta – and continues to strategically acquire promising competitors – I’m convinced it can jump ahead of the pack in short order.