Martin’s Take on 2012

From delayed IPOs, to buyouts, layoffs, and more, 2011 proved to be a volatile year for the daily deal industry. The business model for profitable group buying is still eluding many, and everyone in the industry is scrambling to figure out where to place their bets for growth and avoid being road kill. Publishers, merchants, marketers and business owners want to know what’s next in the social commerce space.

Last year Tippr founder and CEO Martin Tobias released a list of predictions that all proved true in 2011. Martin believes 2011 was just Phase One of group buying. Phase Two begins in 2012, and will be marked by a new paradigm ushering in programs that merge content with a seamless deal delivery experience.. Here’s a list of the daily deal guru’s 2012 predictions.

1. LivingSocial Will Be Purchased

The Amazon-funded daily deal site has patiently waited in the IPO shadow and has learned a lesson or two from its rival’s bumpy road to Wall Street. Tippr predicts that LivingSocial will not stay independent long, despite their IPO plans. Instead, the deal provider will jump to the head of the group buying pack by combining assets with a major e-commerce player. By merging with a company backed by both a large Rolodex and bank account, LivingSocial will be poised to successfully leapfrog Groupon and render it a mere also-ran in the daily deals landscape.

2. 200 “Groupon Clones” Will Bite The Dust As Consolidation Mode Takes Off

With more than 600 companies currently operating in the group buying space, industry consolidation is going to become a very real threat to many daily deal sites. According to Yipit.com, over 170 deal sites failed in 2011. Next year the trend will continue as large companies purchase smaller rivals and other generic deal brands go belly up. Tippr forecasts that over 200 of the ‘me-too’ deal sites will close their doors within the first six months of the New Year. Meanwhile, sites that have found a way to integrate daily deals into their existing content, rather than just photocopying Groupon’s model, will not only survive but thrive.

3. 2012 Is The Year of the White Label

White-label providers will reign supreme in 2012. According to Yipit research, this year white label exhibited a transaction volume of 5-10%, but next year Tippr expects it to double to as much as 20%. Need further proof? Just how the SaaS industry and companies like Salesforce and Concur cemented their position as market leaders by enabling other sites with powerful consumer-facing CRM and expense management applications, so will the winner in the deal commerce game be the player who perfects the infrastructure behind daily deals and makes it available to many. Media companies, niche bloggers, and digital content creators have credible brands, local sales forces, and engaged audiences–critical components that large horizontal sites spend hundreds of millions to grow. The only piece these companies are missing is the technology on which to build a deal site. In the year ahead, white label technologies will allow publishers to prevail after the Groupons of the world have exhausted their resources acquiring new customers and finding new merchants.

4. Big Branded Sites’ Futures Lies In Instant Contextualized Deals

Tippr believes 2012 will be the year big brand sites, which source hundreds of deals to large audiences with diverse interests, establish a profitable business model. But profits will only follow the ability to tailor content, matching the right customer with the right merchant. Simply put, the daily space will be dominated by the players who understand how to effectively merge content and commerce into a seamless experience, allowing consumers access to relevant deals anywhere and at any time. In 2012, Tippr predicts Groupon and LivingSocial will make massive investments in their mobile capabilities, while Google, Facebook and other major audience aggregators will extend their commitment to the integration of location, advertorial, mobile, and contextual commerce.

5. Lacking Loyalty, Groupon Goods Will Come To A Dreary Demise

From the operational challenges associated with maintaining a physical inventory to heavyweight competition from highly efficient retailers like Amazon, Gilt and eBay, Groupon Goods has faced an uphill battle from its very beginning. Tippr predicts that fatal flaw in Groupon’s product arm will be the lack of loyalty and repeat customer opportunity. In fact, recent Forrester research already suggests that 51% of customers who buy the heavily discounted goods said they would’ve purchased those goods or services at full price anyway–but took the discount instead because it was available. Merchants, lacking the customer acquisition required to justify the steep discounts, will opt out of the site’s partnerships.