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Summary:

With daily deals in retreat, it’s forcing companies that have built up to serve that market to evolve. DealsGoRound, a secondary market for deals, is now relaunching as MyCabbage, a broader service for saving not just deals but gift cards and coupons.

mycabbage, daily deals, coupons
photo: MyCabbage

The decline of the daily deals market has not only chased away many deal providers, it’s also affecting many of the businesses that have sprouted up to serve the daily deals ecosystem. The standalone secondary market for deals, which emerged as a promising way for people to reuse and sell their purchased deals, is now all but dead following the closures of Lifesta and CityPockets. The coup de grace is the decision by DealsGoRound, the original secondary deals market, to relaunch as MyCabbage, a broader service for saving not just deals but gift cards and coupons.

Chicago-based MyCabbage is launching Thursday with $950,000 in Series A funding from Lightbank, I2A and New World Ventures. MyCabbage will continue to operate a secondary market for deals, but now it’s free for users. The real focus is on creating a larger social wallet-like service that lets people organize, share and use their gift cards, coupons and daily deals with friends.

Users can have one place to store all their discounts and cash equivalents and see when they expire. And with MyCabbage’s social layer, it makes it easy for users to tap friends to help them redeem them using invitations and calendar reminders. MyCabbage will also allow users to say what brands they like, which can help the service serve up more discounts and offers from those brands and similar providers.

Kris Petersen, founder of MyCabbage, said the original plan was never to rely completely on daily deals. But after operating DealsGoRound, it became apparent that a secondary market for deals wasn’t going to cut it. It was hard competing for customers against the bigger deal providers like Groupon. And users were expecting a higher level of service than Dealgoround could provide. In particular, resolving disputes when it turned out that a sold deal was no longer valid proved very difficult.

But the overall drop-off in the use of daily deals was also a major factor prompting DealsGoRound’s relaunch. Petersen said sales on the secondary market has fallen by half in the last year as consumers become more selective about which deals they buy.

“I know people who used to buy four daily deals a month and now they buy one every other month. We found people are not buying deals and discounts for lifestyle anymore, they are buying deals that are for their regular life,” Petersen said.

MyCabbage’s relaunch follows CityPockets’ decision to close in May and Lifesta’s exit in January. CityPockets’ CEO Cheryl Yeoh, who launched a new deals and coupon clipping service called Reclip.it, told GigaOM in May that the number of daily deal providers had dropped from 800 to a few hundred as deal fatigue and competition took its toll. Indeed, the very term “daily deal” is now becoming almost toxic and early leaders like Groupon are now touting businesses that don’t revolve around that model anymore. Daily deals will still exist because they work in certain verticals. Groupon, Living Social and Google Offers won’t be going away overnight. But the larger daily deals phenomenon is fading as merchants and consumers move on to different ways to interact.

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  1. Always like innovation in this space. The question we believe is creating value-add for all parties – consumers, merchants and the deal company. We are trying to do that as we launch flashpurchase.com enabling buyers and sellers to create their own deals to their own specs with group purchases being enabled efficiently.

  2. Great post, Ryan!

    The whole daily deals model is deceptive. It lures entrepreneurs because typically, any marketplace needs to reach critical mass before transactions start occuring but in case of daily deals, by focusing on one transaction, the model eliminates the initial risk involved in failing to get to critical mass.

    All that is fine and lures entrepreneurs who don’t think it through but the daily deals model, in the long run, is not scalable. Merchants are not on self-serve so there is no AdWords-type magic happening here. More competition in the space makes it a hits-based business (you are only as good as your last deal) which fragments any consumer loyalty as well. Hence, there is absolutely no scalability and people are realising this only after failing.

    I’ve written more on this at http://platformed.info/groupon-clones-critical-mass-paypal/

    Let’s hope these pivots work for the clones.

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