This startup seeks to thrive where Groupon failed

When Groupon launched the daily deals model in 2008, the idea resonated so well with people that it was, for a time, a darling of the tech world. Copycats spread like wildfire all over the globe. In Southeast Asia, one of Groupon’s prominent counterparts was Ensogo, then there were smaller homegrown players in every market.

The sheer number of deals sites, however, led to neck-and-neck rivalries and consumers growing tired of their inboxes flooded with offers – many of which they weren’t even interested in. So the whole thing eventually fizzled out. Groupon and Ensogo started overhauling their operations to shake off their past and launched online marketplaces, much like Amazon and Lazada.

Dealsheep has learned from the struggles of its predecessors, so it’s taking a totally different approach.

With those sites reinventing themselves, it brings up the question: are deals dead in Southeast Asia?

Here’s Dealsheep co-founder David Appold’s answer: “Well the word ‘deal’ is in my email address so my answer is no, though with a big but.”

“I don’t think there is a deals fatigue. But I do believe there is a bullshit fatigue among consumers and [they] are getting tired of deceptive marketing,” he explains.

“I think huge daily deals websites with 600-plus staff that simply broadcast marketing may be over. But in their place there will be smaller and nimbler solutions, often through young startups.”

A contrarian approach

Thailand-based Dealsheep has learned from the struggles of its predecessors, so it’s taking a totally different approach.

For context, the story of the Groupon model goes something like this: the site would offer a steep discount on an experience like a dinner, spa visit, or yoga class so buyers would enjoy a great deal. Local businesses, in turn, would get massive exposure to a new audience that might turn into loyal customers down the road. Both sides were happy and daily deals sites kept expanding.

They needed a critical mass of local deals in each new city so the companies hired a sales team on the ground to secure agreements with all those little restaurants, salons, and gyms.

Headcount grew and soon things got expensive. It turned out that fewer than expected users, who had been expensive to acquire, later turned into loyal, full-price paying customers. People also didn’t buy deals as often as anticipated. Local businesses became increasingly less willing to pay the price for steep discounts and commissions. Fewer merchants would come back – or, maybe worse, deals would have to be less cheap, and so they gradually became less attractive to you and I. As a result of all this, many daily deals sites transformed into selling products or operating as marketplaces in the last few years.

David says all that Dealsheep has in common with Groupon and its ilk is its name and use of coupons. Everything else is the opposite way.

“The most obvious difference is that we are all about buying products, not about local deals. Instead of negotiating with hundreds of tiny businesses for every single deal, we have blanket agreements with a couple dozen big online shops that allow us to use all of their merchandise,” he points out. “Not only does this keep our costs for sourcing deals down, it also means we can be truly independent in our choice of products and feature only good offers.”

The inception

Other solutions