Dubai: Two years ago, one couldn’t open a portal in the UAE without confronting a slew of offers from daily deal sites. It was the fastest growing sub-sector within the web-based industry and had in its fold multiple start-ups as well as those funded by global coupon sites or venture capitalists.
Its pitch was raised to such an extent that users would feel hard done by if they didn’t get to “seal a discount deal” on a near daily basis, for anything from restaurant bookings to two-day trips overseas. Doing so became a reflex action rather than for users to pay for something they actually needed.
But as with any fad that rages for a while, that for discount coupon sites and what they have to offer has been on the wane. Many of the operators, including global ones, have made exits citing the lack of sustainable cashflows as the factor. UAE residents, it seems, have moved on to other interests on the web.
But is it the end of the category as such? “Customers are being a lot more selective about the companies they use and for that reason certain parts of the industry are certainly facing a decline,” said Tariq Ellahi, founder of iAteForFree.com. “Daily deal sites are seeing a substantial slump in end-consumers and businesses.
“The market had become saturated and the trust factor had also decreased due to far too many exaggerated discounts and inferior products/services that were being offered.”
What this suggests are that while cross-sections of UAE consumers will seek out value deals, they would still have a base requirement that the value should be accompanied by a bare minimum of quality. “Another segment of the industry which has been impacted are the traditional voucher books,” said Elahi.
Businesses who used to offer their services through daily deals sites are also wising up. “In the majority of cases, by offering a huge discount on daily deal sites to lure customers, the business is not finding a solution to slow sales but rather making the problem even worse by attracting discount chasers who end up not only causing losses but also never return to pay full price,” said Elahi.
E-commerce practices
Moreover, as they got comfortable with e-commerce practices, some of the businesses who used to deal through these portals started going directly to their target audience. This way they got rid of the via media and the costs they had to share with them.
“The cost of doing e-commerce or web-based sales have stabilised — more businesses want to take direct control of what they have to offer,” said an industry source. “This is nub of the issue for daily deals sites — what they do can easily be recreated. It led to too many players offering the same thing and left a trail of disgruntled consumers.”
So, what was a sunrise industry within the digital realm is at risk of fading out. But that has not discouraged Ellahi from venturing forth with his latest venture, iAteForFree.com. And, strategically, he decided to aim for a different set of potential users rather than the standard discount chaser.
“iAteForFree simply aims to eliminate all the disadvantages of existing discount platforms and incorporate the advantages — at the end of the day who doesn’t love a discount if it’s promoted transparently and for free?” said Ellahi. “This is what has caught the interest of consumers with higher disposable incomes rather than just discount chasers as well as businesses that are serious about their financial health, product quality and service as opposed to just filling up their restaurants with customers.”
