Self-Serve Challenge for Deals

Groupon Now is almost exclusively self-service — that is, merchants upload their own offers and copy art in real time. LivingSocial has InstantDeals, which also relies on self-service by merchants.

Julie Mossler, a Groupon spokeswoman, noted that the most tech-savvy merchants like being able to control their offers and the fact that Groupon gives merchants who self-serve a larger percentage of the revenue their deals generated. LivingSocial Instant Deals, the company provided merchants with iPads preloaded with the software they needed to create deals as well as to keep track of redemptions.

But a quick check of both websites reveals that the right-here-right-now deals are limited both in number and in the markets in which they are available.

The idea of instant deals is appealing to consumers and, theoretically, to merchants, who are able to customize offers to meet specific business needs. And deal services will need merchants to self-serve if they are ever to be able to offer the number of deals that would make instant deals a viable business. So why is this segment of the wildly growing business that is daily deals taking a relatively long time to take hold?

A number of factors could be working against self-service. Instant deals are more attention and labor intensive than traditional deals – the deal is posted and expires in a matter of hours; consumers need to redeem deals quickly; and unlike deals with longer expiration dates, LivingSocial, for example, will refund an unused instant deals.

Another part of the problem, according to Ted Mann, digital director for Gannett NJ, which operates daily deals sites in several markets across the sate, is that merchants are still reluctant to create and post their own deals. “With instant deals, speed is the issue,” he said. “Merchants would rather call sales reps than [create and upload the ad or deal] themselves. And then there is the logjam of processing that occurs.”

Mann said that even when the tools are available and easy to use local merchants don’t want to access them for a very simple reason. “The Groupon Now model is exciting and intriguing,” he said, referring to the idea that merchants can adjust their offers to bring traffic in during slow periods. “But I don’t understand how a restaurant owner is able to put up a special at lunchtime no matter how slow his business is. Small business owners are running around like crazy.  Even when their businesses are slow, they are still running.”

He said that, instead of posting deals themselves, many small business owners would call their sales reps and ask the rep to post the deal. “That whole system has to get hyper efficient on a massive scale or it won’t work,” he said.