This November, Bloomberg reported that Groupon.com was seeking venture capital that would value it at US$3 billion. That’s a nice chunk of change for a “deal of the day” website that sells discounted vouchers for (mostly) food and services. Their motto, “one ridiculously huge coupon each day, on the best things to eat, see, do and buy in your city,” has inspired a series of copycats in Thailand: Ensogo.com, O.ffer.us, Dealdidi.com and, most recently, Thaicitydeals.com, which launched Nov 29 (see The Players). Others, like Bonbondeals.com, are set to launch in a couple of weeks.

For us consumers, what’s not to like? The coupons are at least 50% off and can even reach 90% off. For businesses, these coupons promise instant cash and the possibility of new customers. But on the other hand, cheap coupons for us work out expensive for the business. For example, when a venue honors a B200 off coupon that you paid B100 for, it only gets B50, and the other B50 goes to the website’s commission (see how it Works above). So to offer 50% off, venues have to actually discount their product or service by up to 75%. These massive discounts have caused some to criticize Groupon as only appealing to failing businesses in desperate cash flow situations. Further, they say that services delivered in exchange for vouchers can be of low quality because venues are swamped by a sudden influx of coupon holders after the sale ends.

Gael Ovide-Etienne, Thaicitydeals founder and chairman, doesn’t think wanting cash means a business is failing, though. “We’re talking to a lot of new businesses. Do they need new customers? Of course. New places need clients. But we wouldn’t send our clients to bad businesses. We don’t want to damage our own business.”

As for being swamped by new customers, vouchers are usually made to last a long time, from three to six months, so that a business may get a busy a day or two after the sale but voucher owners should eventually get spread out over a longer period of time. Ian Soo, director of Bonbondeals, also says conditions can be built in, like mandatory three-day-prior reservations.

But the deal-a-day gold rush could soon level off. O.ffer.us hasn’t posted a deal since June. One wax salon owner told us he’d negotiated a commission-free deal with another website, a possible sign of desperation on the deal-a-day front. “Acquiring deals is expensive. There’s an investment,” says Ovide-Etienne. “You need a whole team of people. So a lot of players will release a new site but many will close down eventually.” What Ovide- Etienne foresees, however, is a segmentation of the market, where 12 play- ers could coexist feeding off different demographics: mass market, expats, “adventure travel-types,” etc. Soo, who wants to target both Thais and expats, is less optimistic: “I see three major players remaining within 12-18 months.” And despite being a latecomer, Soo is convinced Bonbondeals will be one of them.

Competition could also come directly from social networks. X2 Kui Buri recently held a Facebook auction for a B21,000 room, which sold for B6,300. With more and more people directly “liking” their favorite businesses on Facebook, merchants could increasingly choose to enter the deal-a-day fray without going through the middlemen. Wait, isn’t that just the return of good ol’ direct marketing? The more things change, the more they stay the same.