March 24, 2011, 4:42 PM

Daily deal revenue will increase 138% this year, Local Offer Network says

The daily deal services vendor says consumers have seen 40,000 deals so far in 2011.

Thad Rueter

Senior Editor

Lead Photo

Revenue from online daily deal and discounts sites including Groupon and LivingSocial will top $2.67 billion in 2011, up 138% from $1.12 billion in 2010, projects Local Offer Network Inc., which sells advertising and technology services to group-buying sites.

The company says at least 320 U.S. sites offer daily deals, and that such sites  in total offered 63,000 deals in 2010. That record will almost certainly be shattered this year, as Local Offer Network estimates that the first quarter of 2011 brought 40,000 daily deal offers to U.S. consumers. “This is driven by new deal brands and an increasing number of sites publishing multiple offers per day,” the report from the company says, adding that the average daily deal site in the United States serves at least 10 markets.

The most popular types of online limited-time deals in the United States remain those related to food and drink, which in the fourth quarter of 2010 accounted for 26% of such online discount offers.  Beauty, spa and massage offers continue to hold the second spot, with 20% of offers, followed by fitness and nutrition, 7%, and sports and recreation, 5%. But Local Offer Network says that home products and services  are making some of the most significant gains, reaching 6% in the fourth quarter from 3% in the third quarter. Offers related to clothing and accessories also are gaining importance, the report says, reaching 4% in the fourth quarter, up from 2% in the second quarter.

While the average discount per offer remains steady at 53%, the average price per deal voucher continues to increase, thanks in part to more deals involving luxury and other high-end goods and services, such as medical and dental care, the report says. The average price per voucher stood at $38.04 in the fourth quarter of 2010, and increased to $42.45 in the first quarter of 2011.

Comments | 1 Response

  • In light of the recent recession consumers have become even more cautious with their purchases and make an effort to seek out ways to save money. Website like Groupon, and LivingSocial could not have found a better time to hit the market. There is no doubt that the “daily deal” industry will continue to grow. Consumers are parting away from conventional purchase methods in search for convenient ways to find local deals at great discounts. There is no surprise that the revenue stream will top 2.67 billion in 2011. The “group buying” model offers a mutual gain for merchants looking to ramp up their customer base driving new business through the door and consumers conveniently being faced with an abundance of great “daily deals” to choose from; everyone wins. This model is also very attractive to small businesses looking to get the word about regarding their products and services, the next wave of daily deals sites might a niche model focused on catering to “small businesses”. The fact of the matter is, sales and profits will continue to sky rocket, there are no signs of any letting up in the near future. When you read about statistics like 320 U.S companies offering daily deals and together selling 63,000 in 2010, you can’t help but think about well… a few things. One, the sheer volume of deals being sold and, two, the amazing response level from consumers and three, what are all these consumers doing with those “daily deals” they once purchased and cannot be used for whatever reason. It is estimated that 20% of vouchers will go unsold, that amounts to a large number of people who have deals that they simply need to sell in order for them to recoup what they initially spent. This is precisely why Skeedka was developed. Here consumers can use a safe and secure platform for the purchase of a “daily deal” they missed and the sale of a “daily deal” they simply won’t end up suing for whatever reason. The group buying sites are great and clearly got it right; however, the pressure to purchase the deal remains and consumers are in a way forced to purchase on impulse. Skeedka is an online marketplace where consumers can use several options to either buy or sell “daily deals” from websites like Groupon and LivingSocial. Several options are made available, Sellers can post deals for sale through auction style listings, sell them for a fixed price, or accept best offers. Buyers are given the opportunity to buy, bid on, or make offers for unused daily deals in their city. One can also see that, recently, the average price per deal voucher has been increasing, but still offering the same discount level. The deals are now being offered at higher prices for more “premium” goods and services, if you will. As the average price per voucher increases the need to ensure that there are safe and secure platforms to resell those deals becomes even more important. The key is to offer consumers “options” give them the confidence they need moving forward so they may continue purchasing comfortably.

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