Daily deal companies like Groupon and Living Social are hiring at an incredible pace, making them enticing opportunities for job applicants. But not all companies are created equal, and job hunters need to be wary about which organizations to join.
Listing a top daily deals sites on your resume is an asset, said Forrester Research analyst Sucharita Mulpuru, and it's an especially good opportunity for people beginning a career in sales. The sites "are looking for very young people, and you're developing a marketable skill set," Mulpuru said.
Young job hunters naturally want to work for a company that is "trendy and cool," said Ken Homa, a marketing professor at Georgetown's McDonough School of Business. Getting in on the ground floor of a fast growing company can be exciting.
Yet the proliferation of daily deals sites raises the question of how many will remain in business. While the number of daily deal sites almost doubled in the first half of the year to 362, some 132 such sites have closed this year, according to Yipit Inc., a New York-based company that aggregates online deals in 30 of the top markets in North America, including New York, San Francisco and Toronto.
Job hunters should be aware that the company they join may cease to exist in a short time, said Harry Joiner, an Atlanta-based e-commerce recruiter. "As a sales rep, you need to ask, 'What is the end game with this smaller company?'" Joiner said. "Is it built to last or built to flip? A lot of these companies are built to flip."
For those developing a long term career, the sustainability of the daily deals model is critical. "It's been relatively easy during a recession to get local merchants to sign up once for [Groupon's] service," Homa said. "If this is a survivable business model, I'll be stunned."
After Chicago-based Groupon filed for its IPO, the SEC raised questions about the financials underpinning its business model. The firm then revised its earnings numbers to show that high marketing costs contributed to a $102.7 million loss in the second quarter.
There may be such a thing as just too many deals. Prior to April, LivingSocial used a "one-deal-per-day model," according to Yipit. Since introducing more deals per day, LivingSocial's revenue per deal in the top 30 North American markets has fallen to about $15,000 in June from about $19,000 in each of the first four months of the year, according to Yipit.
As local business owners receive more calls from daily deals salespeople, salespeople have to work harder to get their attention. Cold calling for these sites is "sales on steroids," Joiner said.
Working for a recognizable brand eases that problem. "Every sales space is a dangerous space to be in if there's not a good brand, if people haven't heard of you before," Joiner said.
The big brands are still hiring briskly. Groupon now has 9,625 employees, according to its IPO filing with the U.S. Securities and Exchange Commission. That's up more than 3,000 from April.
Living Social, with 2,859 employees, is up 1,659 since April and "we're still hiring in the 150-per-month range," said company spokesperson Brendan Lewis.
KGB Deals, owned by New York directory-assistant company KGB Inc., hired 90 people last year and "the outlook for expanding our sales force remains strong," said Jeb Blount, vice president of sales at KGB Deals.
Having a known brand like Groupon on your resume can't hurt. "When people are selling themselves for the next job, the fact that they had this experience and they saw the formula provides a meaningful credential," Homa said.
Related: Getting in on the Ground Floor at Groupon and Living Social
Write to Chris Prentice at chris.prentice@dowjones.com
