When yoghurt came to the UK in the early 60s, it was plain white gloopy stuff that nobody ate. The Ski brand changed all that in 1963 with the masterstroke of adding fruit, thereby making it a little less like baby sick, and a category was invented. As its popularity grew, competition spurred innovation and the category proliferated to the bewildering wealth of choice offered today, from low-fat, frozen and set to fruit-topped, fruit-bottomed and fruit-cornered.
Structurally, the diversification of a simple product, with which one brand almost managed to become synonymous, into a set of brands, variants and subsets that no one company could dominate, had inevitable consequences for the margins in that market.
Will this happen to daily deals? Groupon's management certainly hopes not. Having spurned a $6bn offer from Google last December, it intends to go public with an IPO designed to raise $750m to fuel expansion; a sum that could value the company at between $15bn and $25bn, depending on whose numbers you're smoking.
Yet the firm hailed by Forbes as 'the fastest-growing company ever' after its 2000% revenue growth last year is starting to look a bit less of a sure-fire hit. As it scrambles amid delays to get an IPO away while enough magic dust still adheres to the daily-deal concept, it looks like there's a race on between the IPO and the market in which it operates.
Some of this has been brought on by Groupon itself, but most is down to the 'yoghurt factor'.
Closing offices in China (reportedly even shutting one outpost at lunchtime while the staff were out) is one thing, but dismissing it as 'just one example of ... fine-tuning our strategy' is bizarre. This is China, after all, not Belgium.
Then there's chief executive Andrew Mason's email to more than 7000 staff, which, not surprisingly, got leaked. In the pre-IPO 'quiet period', it is sailing close to the wind with what was clearly expected to become public.
Add to that the 'Adjusted Consolidated Segment Operating Income' basis of its valuation, which might as well stand for 'weird dotcom bubble-type metric that makes us look profitable', and the 50% dive in traffic the site suffered during June (when its biggest rival, LivingSocial, grew by 25%), and we're starting to look at something investors might feel less bullish about, but consumers don't worry about.
Nonetheless, it is the 'yoghurt factor' that is going to cost it merchants and consumers, and it's happening at both ends of the market.
More than 600 competitors have sprung up. In the UK, media-owners such as STV and O2 are leaping on the bandwagon, while brands from New Look to BP are doing it for themselves.
The pincer movement is completed by Google, Amazon and Facebook. Although the latter closed its Deals service recently, it lacked certain key components of the Groupon model; it's unlikely this is the last we'll see from the social network in this market. Google, meanwhile, has been acquiring companies in this space, and has something Facebook doesn't: a billing relationship with millions of small businesses.
AmazonLocal, however, presents the biggest threat. With 150m customers, a trusted brand, credit-card details for the vast majority and, crucially, its own products to promote, its parent has the means, skill and content to get over the startup phase where merchant shortages lead to daily fish pedicure offers.
I might keep my money in my pocket when it comes to Groupon's IPO, but don't let one company's performance distract you. Daily deals will continue to burgeon as a sector, and consumers will be influenced by its un-yoghurt-like mix of impulse and interruption.
Andrew Walmsley is a digital pluralist.
30 SECONDS ON ... AmazonLocal
- In December 2010, Amazon.com invested $175m in daily deals site LivingSocial; in turn, LivingSocial became the first provider of deals for the AmazonLocal operation.
- AmazonLocal launched in June this year with deals for the city of Boise, Idaho. It has since expanded its offering to 30 locations in 10 states. Deals are available to consumers in locations from New York City to the San Francisco Peninsula and Miami to Snohomish County, Washington State.
- When it launched in New York in August, AmazonLocal said that consumers in the city could expect deals such as '50% off tickets to Cirque du Soleil's newest show, Zarkana, in Midtown' and '$13 for $27 worth of cupcakes at Brooklyn Cupcake'.
- The service also offers deals from affiliated sites, such as Amazon.com, MyHabit.com and 6pm.com.
- Customers who use Amazon Rewards Visa cards can earn five points for each $1 spent on AmazonLocal in 2011, after which they will earn three points for every $1 spent.