Leading daily deal site closes its voucher business

17 June 2011

New Zealand-owned daily deal company 1-day has today announced it is pulling the plug on its standalone voucher and coupon deals website 1-dayout, to instead concentrate on growing its highly successful core offering of selling discounted products online.

1-dayout, a subsidiary of parent 1-day, launched in August last year offering entertainment and activity vouchers throughout New Zealand at discount prices. The site offered discounted coupons each day at noon, for a 24-hour sale period.

Group Sales and Marketing Manager Race Louden says the portal is closing because the company doesn’t see vouchers as a viable long term business model for both the 1-day business and for the suppliers/vendors.

“It’s been a great ride while it lasted. As market leaders, we came into the voucher business in August last year with a plan to provide great offerings for consumers and vendors – a concept that we believed would provide an ongoing win/win/win for all parties, But in reality the only real and sustainable win is for the consumer – they get real discounts from vendors and don't need to show any kind of loyalty, all they need to do is buy the voucher.

“The vendor often gets the wrong kind of customer through the doors and isn't able to up sell them or retain them as a regular customer. We have done a large amount of research into group buying and are in no doubt that shutting down our site is the best option long term.”

Mr Louden says US Associate Professor Utpal Dholakia from Rice University has just completed the first piece of international research on the growing ‘group-buying’ model.

“The research shows the model has a negative impact on the vendor’s long-term brand value and can create negative buying patterns Consumers turn into deal hunters and will visit whatever restaurant/establishment is offering the deal without developing loyalty to any one brand.”

Mr Louden says the voucher market has experienced a number of issues with suppliers inundated with customers wanting to redeem their vouchers but not being resourced enough, or prepared, to cope with the extra demand.

“This leads to disgruntled customers which can destroy the vendor’s brand. It may also cannibalise already loyal customers who want to know why their loyalty hasn’t been rewarded.”

Another key factor affecting the long term sustainability of the group buying model in NZ is the limited volume of businesses and customers within the domestic market.

“A prime example of this is the canvas photo printing industry. Customers can regularly find these deals online which has meant the industry as a whole is now unable to charge full price for their services.”

Mr Louden says 1-day’s core offering of selling discounted products online is growing strongly and the company is in great shape. It plans to add two additional websites to its stable by the end of the year.

“We believe there is far better growth potential for the company by focusing on this side of the business.”

1-dayout will close on Sunday 19 June. Suppliers will be obliged to redeem all vouchers sold up until this date. The staff employed by 1-dayout will be redeployed to other areas within 1day’s team of nearly 200 staff.

1-day will continue to provide a customer service function for all 1-dayout vendors and customers through the immediate transition period.

ENDS

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