Advise on launching niche Daily Deals site

Ian McLean Developing Startup Grunt, Tech Co-Founder

April 30th, 2014

A partner and I have launched a social personality within the retro gaming community and nerd/geek community (heavy overlap) that has grown to a network of 40,000 - 12% of which is very loyal. I've recently identified a wholesaler who stocks toys and games very specific to the niche.

That said I'm thinking of launching a daily deals site similar to woot/groupon: 1 deal a day and a specific number of orders must be received for the deal to activate

Any input on the following would be greatly appreciated.

1. Does the daily bulk deals model actually outperform the traditionally marketed multi-item store?

Groupon struggled with the legwork of obtaining participants and had no real market focus. In my case I want to focus solely on a single merchandise market. Still - I'm not nearly familiar enough with this model to assume that this will make a significant difference.

2. Assuming #1 isn't an exhausted strategy what are some suggestions on negotiating lower prices with wholesalers in exchange for high number orders of a single item.

3. Any other words of wisdom?

Much thanks as always to all the brilliant individuals on FD.

Travis Workman Founder/President at Cognisoft

April 30th, 2014

I have done a few daily deal site's one if which is camofire.com founded by 2 guys from woot.com who decided to sell daily deal hunting gear to hunters. 1 - Daily bulk email is important but it is even more important to keep those items in a blog to have content awareness of those products you are selling along with fresh content for SEO purposes and organic traffic. A daily email is necessary as well so that they can forward those emails to friends who might be interested in that specific deal 2 - I did not do any of the negotiating with the wholesalers just integration into their systems. 3 - make sure you use your daily deal to generate content about the items, and watch your statistics. Use twitter, Facebook and other social outliets like pinterest to add more eyes on your daily deal nad get your community to follow and share it. Lastly I would implement some gamification tactics to increase buying of users. Just a few thoughts of mine hope they are helpful

Tim Kilroy Analytics - LTV - Boosting Profits - Digital Marketing

April 30th, 2014

The daily deal model is pretty dead - so I would not rely on it as a single revenue stream. And you have a REALLY small community - with 40K network and 12% as loyal - that means your real target market is 4800 - can you rely on your merchandising instincts to insure that you have a hit every day? You may be better off with a full selection store plus a daily deal component - but again, if your network is really interested in content, they make the occasional purchase, but it is unlikely that you have a big enough audience to generate any meaningful e-commerce sales (though, that all depends on your meaning of meaningful). That said, when you work with your suppliers, work the deal this way: 1.) Do not buy the inventory until it has been purchased - have the distributor dropship to your customers. 2.) Assume that your margins are going to be REALLY slim in this model (say 15-20%) - make it attractive for the distributor to sell to you 3.) As you start to grow volume with distributor across the breadth of their product selection, start building in volume based discounts over time...

Daniel Caplin Vice President of Services at WhatCounts

April 30th, 2014

Hey Ian: I've launched several ecommerce sites in the daily deal and group buying model. niche is the way to go if you have access to the customer base and can present an authentic user experience with excellent product. DM me if you want to set up a call. Daniel Caplin ph. 678.886.3262 daniel@danielcaplin.com danielcaplin.com http://www.linkedin.com/in/danielcaplin/ LEGAL DISCLAIMER The information contained in this e-mail is for the exclusive use of the intended recipient(s) and may be confidential, proprietary, and/or legally privileged. Inadvertent disclosure of this message does not constitute a waiver of any privilege. If you receive this message in error, please do not directly or indirectly use, print, copy, forward, or disclose any part of this message. Please also delete this e-mail and all copies and notify the sender. Thank you.

Rachel Goldstein Associate at Kirkland & Ellis LLP

May 1st, 2014

In the current e-commerce market, one of the only viable ways of competing with big box giants like Amazon is by launching a site with a highly-curated selection of products that is narrow and deep for a particular audience. If you can also offer proprietary pricing through a daily deal model, all the better. It sounds like your gaming community and the products you've identified are exactly that, so it seems like the idea could function, at least in theory.

But I'm curious to know why you want to go with a daily deal site rather than just a traditional e-commerce store? Proprietary pricing is one way of attracting an audience, but it's riskier than a traditional store because it requires a critical mass, the margins are lower, and you have to negotiate lower prices with the wholesaler. Have you considered making it a bit easier on yourself and (at least at first) launching a traditional multi-item store curated with the products you've identified from this (and ideally other) wholesalers? Since you are a presence in the community and seem to know your audience well, it seems like you might find it easier to succeed with such a boutique model. The difficulties of this model shouldn't be underestimated--it's not easy to develop a well-curated selection of products along with content that engages your audience--but it sounds like you're in a good position to do this.

Ian McLean Developing Startup Grunt, Tech Co-Founder

May 2nd, 2014

Tim Kilroy:

"The daily deal model is pretty dead "

I expect that this is highly likely at this point considering how far out we are from the initial introduction of the model. Regardless, I'd be interested to hear what you think the specific reasons are behind that. What has been the downfall?

“can you rely on your merchandising instincts to insure that you have a hit every day?”

The nice thing about this segment is that they are fairly fanatical about a lot of game and entertainment IP. My observation has been that they don’t seek out merchandise. Still - in the event that something comes across their path (say at a vendor room at a convention) that resonates with them in the 3-10 dollar range they seem quick to buy it. Great point though - if it doesn’t take I will very quickly pivot into a multi-item store with daily deals. Failing that I’ll shut it down and move on. From a standpoint of effort involved the single item approach seems to be a destination on the path to a multi-item store that could launch very quickly - this was my initial strategy. On the other hand Shopify etc it doesn’t require much to get a full shop going so perhaps it’s just as easy to go for the whole 9 years here.

Points 1 2 and 3 are great advice - thanks for voicing them.

Ian McLean Developing Startup Grunt, Tech Co-Founder

May 2nd, 2014

Travis Workman

Daily Bulk Email (courteously of course) - Got it

Blog Content - Absolutely, and this content is often less about the product but more industry musing, insights and opinions which I feel is more of a genuine approach.

Interest sites - Facebook, Twitter, Pinterest, Instagram, Vimeo, Esty and to a lesser extend Ebay are what I had earmarked for this kind of effort. I Would love to hear other suggestions of platforms that are good for this.

Gamification - I’m aware of raffles and contests. I’m in the shallow end on gamification techniques - any other good options you would recommend?

Ian McLean Developing Startup Grunt, Tech Co-Founder

May 5th, 2014

Rachel Goldstein:

Thanks for the insights. The daily deal approach just seemed like a leaner approach in terms of rolling the site up and making merchandise selections. I typically prefer to launch small and sooner whenever possible. The general consensus here seems to be to go straight for the traditional boutique so I believe I'll taking it in that direction.

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