As we reported this week, there’s something wrong in the daily deals business. One in five deals purchased expires before it’s redeemed. That’s called “breakage.” New data released by CityPockets provide a much richer breakdown of consumer behavior around daily deals.
CityPockets found that the average time before a voucher is redeemed is 3 months, while the average life of a voucher before expiration is 7 months. The data also show that 20% of vouchers go unredeemed, just about exactly what our previous report found. By CityPockets’ measurements, $1.2 billion, with a B, has been wasted on expired vouchers since this market emerged.
CityPockets is an NYC-based startup that provides a “digital wallet” to help consumers keep better track of their deals. It also has a secondary marketplace for customers to sell and buy deals they aren’t using. The wallet helps users organize and keep track of their deals, so they’re less likely to forget about them, and the secondary market allows them to dump ones they won’t use. These are strategies that can help recover some of the value lost from daily deal breakage, and CityPockets says that 25% of deals that are re-sold still make a profit.
Scroll on for a detailed breakdown of who buys daily deals, where they buy them, what kinds they buy and more, as well as how many deals go to waste:
