LivingSocial will skip the IPO and get acquired. Hundreds of smaller daily deals startups will shut their doors. Groupon’s special product offerings will crash and burn.
Those are among predictions for 2012 from Seattle’s Tippr, a daily deals startup that focuses mainly on offering white-label services to publishers that want their own discount brands.
Headed by CEO Martin Tobias, Tippr has taken a pugnacious approach to its competition in the bubbly daily deals sector, unafraid to call out the big names or use its Paul Allen-sourced patent portfolio to wage court battles and takeovers. Not surprisingly, Tobias’s predictions for the year ahead in daily deals reinforce his own position—that standalone consumer brands are hard to build and unsustainable, and partnering with dedicated publishers is the place to be.
So apply that filter when assessing Tippr’s 2012 prognostications. But recall that, with the astronomic ascendance of Groupon (and the whole sector) in the past year or two, there’s going to be plenty to watch in the months ahead—and these guesses are probably as good as anyone’s, if not better:
• LivingSocial Will Be Purchased
In September, it was rumored that the No. 2 daily deals brand behind Groupon (NASDAQ: [[ticker:GRPN]]) would shelve its IPO ambitions amid a slack market and seek more private fundraising instead. Tippr’s Tobias says that pattern will hold, and LivingSocial—whose investors include Amazon.com—will tie up with “a major e-commerce player. By merging with a company backed by both a large Rolodex and bank account, LivingSocial will be poised to successfully leapfrog Groupon and render it a mere also-ran in the daily deals landscape,” Tippr says.
• 200 Groupon Clones Will Bite the Dust
Even after a wave of consolidation and continued battles for third place and beyond, Tippr says there are still more than 600 companies in the group-buying sector. That means consolidation will continue. Data from the industry aggregator Yipit pegs the number of failed deal sites this year at more than 170, and Tippr predicts that more than 200 will go down in flames in just the first half of 2012.
• Year of the White Label
Tippr shifted its primary focus to providing white-label services to online publishers earlier this year, and Tobias previously told us about his bullish bet on that approach—lower (or nearly zero) costs to acquire an audience being a big part of the calculation. So it’s no surprise that he thinks next year will be the prime time for providers chasing that model. Tippr says that in 2012, white-label providers could make up about 20 percent of the market.
• Branded Sites’ Futures: Instant Contextualized Deals
Also along the lines of the deals-as-a-service idea articulated above, Tippr says the big-name providers Groupon and LivingSocial will find profitability—but only after they start pairing their discounts with relevant content of other types, rather than building standalone commerce brands. Tobias says that Google, Facebook, and other big-audience players will come at this problem from the other end of the spectrum, adding deals in context with the content they already have.
• Lacking Loyalty, Groupon Goods Will Come to a Dreary Demise
Groupon’s foray into direct e-commerce, Groupon Goods, doesn’t have a very bright future in Tippr’s eyes. Tobias cites research from Forrester that suggests a plurality of customers would buy a given good at full price anyway—hinting that those shoppers aren’t loyal to the Groupon discount, but more to the product. “Merchants, lacking the customer acquisition required to justify the steep discounts, will opt out of the site’s partnerships,” Tobias predicts.
