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Deal Burnout: Too Many Discounts?

"That sense of urgency declines when you see the same deal on multiple sites or you notice each of the deal sites sends you the same kind of stuff over and over again," said Michelle Madhok, an online shopping expert and founder of SheFinds.com.

And it's not just the sense of urgency to make a purchase that changes, it's the level of expectation consumers have about what does and doesn't constitute a good deal.

"I think consumers are approaching a new normalcy for bargains where they have come to accept the bargain as being the standard price, reducing their impact," Yarrow said. "After all, if everything is always on sale, then the sale price becomes the new full price."

In short, deals that consumers once would have considered too good to be true may now be seen as too common to be good.

Too much of a good thing
Research on the impact of bombarding consumers with deals online is limited, since the phenomenon itself is relatively new.

One survey earlier this year from PriceGrabber.com found the majority of online shoppers (52%) confessed to being "overwhelmed" by the sheer number of daily deals they got, though this said nothing about whether that made them more or less likely to buy the deals. Likewise, an informal poll of more than 30 readers found that roughly half would jump to buy a random product only if it were discounted by 50% or more, perhaps hinting at the shift in deal expectations that has already occurred among consumers.

But the most telling study to date will likely come in the next couple months from Utpal Dholakia, a professor of management at Rice University, and his co-researcher Sheryl Kimes, a professor of operations management at Cornell's School of Hotel Administration. Dholakia has gained significant exposure in recent months for a series of studies about the effectiveness of daily deal sites from a business perspective, but his current research project analyzes how consumers respond to daily deal offers over time, with a focus primarily on restaurant deals.

Though the research is still in the beginning stages, Dholakia has noticed some striking trends from preliminary interviews with daily deal users.

"We definitely see a diminishment of interest and involvement with daily deals over time," Dholakia says. "When consumers first sign up for deals, they are enthusiastic and interested, they want to share the deal with friends and family, but in interviews we've done, we see people don't share their daily deal choices on Facebook and Twitter as much later on. It's a classic symptom that they are becoming less involved."

According to Dholakia, consumers start off eager to "explore" a deal site and build up their preferences, but gradually the promotions blur together, become too predictable and lose some of their luster.

One side effect, Dholakia says, is that consumers lose their interest in and loyalty to specific deal sites such as Groupon and turn more toward services that aggregate deals from multiple sites by category to better find the few deals that entice them.

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