Updated on 28 February.
Welcome to the land of the living dead — at least that’s what the media and pundits will have you believe about the daily deals industry. Things took another turn for the worst when news broke that LivingSocial had to make large concessions to get USD 110M in financing.
For the rest of the daily deals industry, that’s horrible news. LivingSocial, being the second largest group buying company in the world, is the standard bearer for the others. LivingSocial’s valuation has sunk too — the company is now worth about USD 1.5B, down from USD 4.5B during the previous financing round.
Which brings us to a new development: Deal.com.sg, one of the largest daily deals sites in Singapore, has announced that it has launched a second physical collection point in the country. The news release certainly seems timely, coming shortly after word spread about LivingSocial’s debacle.
Speculations aside, what we do know is that there’s clearly a demand for physical collection points by daily deal customers in Singapore. According to the company, its brick-and-mortar outposts have been getting ‘heavy foot traffic’ from people customers to redeem their items — a phenomenon that has been observed for Groupon’s store as well.
It is painting an optimistic picture about its outlook. In 2012, the company doubled in revenue in Malaysia while registering double-digit growth in Singapore, said Patrick Linden, CEO of Dealguru Holdings, the company behind Deal.com.sg.
The company is making about USD 50M a year from daily deals, with the Singapore site making USD 3M a month and the Malaysia site USD 1.3M. It has 150 employees working on daily deals, and 70 working on food delivery.
While daily deals sites are shutting down left, right, and center, he sees it as part of a natural process. “I wouldn’t describe it as a perishing industry at all. Consolidation in the number of players is a normal development as the industry matures,” he said.
Their optimism has not stopped them from venturing into other verticals. We’re seeing Asia’s daily deals sites diversify away from group buying recently — Deal.com.sg has gone into the online food ordering business, while Groupon Indonesia now operates an online retail store with its own inventory.
It sure seems that daily deals is fast diminishing as an industry in itself, becoming just another feature in the e-commerce landscape. Nonetheless, as we look back into e-commerce history, daily deals might have been an important contributor to the growth of online buying in the region.
“Although I agree that daily deals are often described as a new format of e-commerce in established markets such as the US or Europe, e-commerce in Southeast Asia only started with deals, there was no sizable volume or market here before the advent of deals,” said Patrick.