The DealMap – aggregates Groupon style daily deals

Via Greg Sterling’s Screenwerk blog I discovered The DealMap which collects data on daily offers largely from daily offer sites like Groupon and Keynoir.  It then makes these deals available in a daily email, via a heatmp, and soon via mobile apps (global and London heatmap’s below – and I note with sadness that there are no offers near my home in N5 :-().

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I have been watching the success of Groupon and the emergence of multiple clones in Europe with interest.  I often get asked about how I think it will shake out, and whilst I think that the daily deal model is of value to both consumers and merchants my fear in Europe is that competition may put margins under undue pressure.  Given our current later stage investment strategy we haven’t made any investments in this sector, but that could well change if a leader emerges who is making the model work.

My concern around margins has had two aspects – firstly that competition will drive up the cost of acquiring subscribers to email lists and secondly that having a choice of daily deal sites will prompt suppliers to try and cut the margin they give to the site in return for providing customers (I think Groupon takes 40-50%).

If sites like DealMap gain traction then I imagine they will start looking for a piece of the action, putting further pressure on margins.

Update: I’ve heard from Keynoir that they block crawlers from accessing their deals and hence they won’t appear on DealMap.  I don’t know how this pans out across the sector, but if all the major daily deal sites block DealMap then clearly they won’t have much of an impact on margins, or anything else.

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  • I was chatting with one of the players recently who was hinting that he needs to be getting 70% discounts in order to make any reasonable money and that London may almost be too big as he is getting a lot of comments back such as “you don't have anything in N5” or “all I see are super local offers for Notting Hill and I don't live or work there”. The thought was that the model would work better in a place like Leeds where you can pretty much walk everywhere but I'm not sure you have the volume of potential users to drive the model – I'm wondering if Europeans are mobile enough (ie willing to travel an hour within their own city) for these really local deals. I think you're right that competition will drive the margins down (a dozen players in UK, 5-6 in DE and at least 4 here in Paris), the outright winners will be able to either settle in a niche or be well enough funded to subsidise their discounts until the others run out of cash.

  • Thanks Andrew. I hadn't thought about the travel aspect.

  • Sam Evans

    So arguably the market will only support 2-3 players maximum in this space and it will come down to quality of deals, execution, no. users, and who has the most fun!