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Deal of the Day Websites Have Gone Crazy in Miami, But Businesses are Increasingly Wary

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Deal of the Day websites seems to be out of control in South Florida. Today, Miamians can log into Groupon for a deal on a sailboat ride. They can head over to Gilt City for discounts on three-course meals, keratin treatments, and custom shirts. Poll Dancing lesson fees are slashed at Couptessa. Living Social is offering 50 percent off food at an Española Way restaurant. New Times' very own Voice Deal of the Day has a similar deal at the Burgundy Room. CBSMiami has yet another similar offer for Med Italia. MyCotorra has cheap photo packages.

The proliferation of these deal of the day sites is out of control, and The Miami Herald is set to launch their very own as soon as April. Though, increasingly businesses offering these types of deal are becoming wary of the benefits. How long will the deal bandwagon last?

The McClatchy Company, parent of the Herald, already has an existing relationship with Groupon (in fact, The Herald was hawking subscriptions on the site not too long ago), but according to Ad Age McClatchy is devloping its own deal-of-the-day service. There's no mention of when specifically the service will be rolled out in Miami, but the McClatchy effort will begin in April.

While there seems to be an obvious demand for cheap deals, how can all these services supply quality deals day after day in one city? The Wall Street Journal reports that businesses are becoming increasingly wary of working with such services, especially Groupon.

Small businesses used to jump at the exposure. They figured the chance to reach new costumers and guarantees of bulk business would be beneficial to the bottom line. In practice, businesses slash their goods and services by a significant percent. In the case of Groupon they then split the remaining meager profits with the service 50-50. As for those potential repeat costumers they hoped to lure: well, most of them are just deal fiends who will jump from place-to-place in search of a good discount. It's no surprise that businesses are increasingly wary of the trend.

In fact, The Journal uses a business in South Miami as a case study in businesses that are becoming increasingly picky about which sites they choose to deal with:

MyCotorra.com, a small site based near Miami approached [Lisa Gurvich, owner of Lasoderm, a laser hair removal practice in South Miami] for her first deal. Together, they devised the offer: $89 for six sessions of laser hair removal. Ms. Gurvich asked to limit the deal to specific body parts and to one deal per person. More than 100 people purchased the coupon. Ms. Gurvich offered another discount for a future treatment, which about 40% bought, she says.

Ms. Gurvich then did a broader offering with Couptessa.com, a much larger site with nearly 100,000 subscribers in South Florida. It delivered a crowd of what she called coupon addicts--customers who bought several deals from a variety of sites and would bounce from one practice to the next. Couptessa says that half of its affluent subscriber base has become long-term customers for many of its clients.

Ms. Gurvich has since signed an exclusivity agreement with MyCotorra.com. "The tiny site has worked wonders for me," she said.

While these kind of arrangements at first seemed beneficial for everyone, increased competition and e-savy coupon fiends means businesses are more and more likely to be wary of dealing with the sites. In an increasingly crowded market it should be interesting to see how McClatchy's efforts pay off.

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