Today I received an invitation to join Bync, a new deal site that promises to offer deals that I WANT as opposed to deals that retailers are offering (TechCrunch launch article here).
By analyzing my bank and credit card transactions, Bync will determine which stores I have shopped at in the past and therefore, at which stores I want deals. Unfortunately, Bync is doomed to become yet another in a long list of consumer deal startups that are just further poisoning the retail well.
Bync vs Groupon / Living Social
Groupon and Living Social are the big players in the retail deal websites, and there are literally hundreds of others ranging from unique schemes (e.g. Woot) to a long tail of weekend hacker projects that won’t die. Bync’s scheme does have some good logic though – if I have shopped somewhere in the past, there is a higher likelihood that I will want a deal there than the likelihood that I will want a deal on teeth whitening, paint balling, or private massages (the drivel constantly being pushed on Groupon).
But, that is NOT to say that I will want a deal at Target or Kohl’s just because I have patronized those retailers in the past.
Why Deal Sites Are Doomed: They Are Not Serving Their Primary Customer!
Groupon and Living Social made a huge bang in their early days and delivered a serious injection of customers to the retailers which offered deals. Unfortunately those retailers quickly found mixed results with making the customer injection a profitable endeavor.
Retailers find three difficulties in getting good value from deal sites:
- The discounting required is too drastic, often yielding 75% off normal price (a $100 product is offered for $50. Then the deal site takes half of the $50payment resulting in the retailer receiving $25 for a $100 product).
- The new customers are too thrifty. Retailers are not always able to wow the deal site customers into more profitable upsells or loyal repeating customers.
- Deal site offers tend to create a sudden massive spike in customers which sounds great, but often results in the retailer struggling to provide good service levels and even crumbling under the pressure of the demand.
Groupon, Living Social, and most other deal sites do not charge the consumer, but rather charge the retailer (as noted in difficulty #1 above).
Bync may well offer deals to consumers that are more targeted than the deals offered on Groupon and Living Social, but there is no apparent strategy to better service their ultimate paying customer – the retailers. Indeed they do not seem to be addressing any of the three customer problems.
Unfortunately, Bync has another obvious barrier: they expect consumers to hand over access to their bank account and credit card. Mint has been able to convince consumers to hand over access to bank accounts, but very few others have had even slight success in overcoming this barrier.
The Ultimate Deal Site Concept
I have good news for you, Mr. Ryan Bales (Bync CEO and Founder), the following concept is the ultimate deal site! The following concept is better than Bync, Groupon, Living Social, and all other deal sites in the following ways:
- Better solves the general problem of getting retailers more customers
- Comprehensively addresses all three of the problems with current deal sites
- Offers deals to consumers that are explicitly and exclusively deals that consumers want
The ultimate deal site will work as follows: [click to continue…]