5 Business Predictions for 2012
So 2012 has arrived, and with it thousands of business predictions for the new year. One blog post in particular links out to 300+ Internet marketing predictions for the new year (!!).
My track record, while not perfect, has been fairly accurate. And so, once again, I’ll venture a few modest business predictions for the New Year. Here they are…
Business Prediction #1:
The Daily Deal Bubble Will Pop
Susan Payton predicts that daily deal sites will shake out. I don’t disagree, but my prediction goes further: I predict the entire daily deal “bubble” will pop.
Spring of 2011 was when Groupon reached its zenith. Everybody was talking about Groupons and other daily deal sites like Living Social. People were buying Groupons and using them.
But as Groupon’s IPO approached, they were already seeing a massive drop in traffic. People were growing tired of the daily deals and the daily emails.
Worse still, many merchants who were once eager to jump on the Groupon bandwagon had grown smarter. They’d gotten burned and were unlikely to ever offer another Groupon again.
Rachel Brown operates a bakery in England. She offered a 75% discount through Groupon — 12 cupcakes for only $10. More than 8,500 people bought her Groupon. She had to hire extra help just to fill the orders.
Brown lost $20,000 on the Groupon and says, “Without doubt, it was my worst ever business decision.” (On the bright side, her worst business decision was not as bad as mine.)
If you’re skeptical of my prediction, then I suggest you visit Rakesh Agrawal’s blog. He’s covered Groupon extensively, pointing out flaws in its business model and covering negative Groupon stories that almost nobody else is covering.
Even Perry Marshall closed out his 2012 predictions with this pithy comment: “P.S. Groupon’s gonna fizzle.”
Business Prediction #2:
Stricter Kindle Publishing Requirements
The year 2011 was the year that Kindle publishing exploded. It was also the year we learned about uber-successful Kindle authors like Amanda Hocking who, at age 26, was reportedly selling 100,000 copies of her ebooks every month — and keeping 70% of the revenue.
Kindle publishing had made Hocking a millionaire.
While lowering the barriers to entry is a good thing for honest, hard-working authors looking to get a break, it also opens up the doors for abuse. And so toward the end of 2011, it was becoming apparent that Kindle spam was a problem.
Amazon had already banned affiliate links from being included in Kindle ebooks, but the Kindle market continued to be swamped with low quality ebooks slapped together from cheap PLR content. Seth Godin writes in a post titled “Fake Books”:
When anyone can publish a book, anyone will.
Including people who will collect up public domain articles, paste them into Word and hit publish.[…]
The giant risk (okay, it’s not a risk, it’s a certainty) of the long tail ebook revolution is that without enforced curation due to scarcity, the average quality is going to plummet (it has to) and the risk of buying a bogus book goes way up.
My prediction is actually twofold. I predict that Amazon will implement rules to cut down the amount of ebook spam in the Kindle market. And I also predict there will be some sort of curation service that helps readers find the best books in the areas they’re interested in.
This curation service could be the continuation and expansion of the Kindle Singles market, or it could be some third-party service. Either way, readers will need a better way of sorting and finding quality Kindle ebooks — and avoiding the junk put out by opportunistic marketers.
Business Prediction #3:
Governments Will Try to Control the Internet
The Internet has easily been the biggest force for change since the invention of the printing press. Governments are afraid of it. They can no longer stop the spread of information or shape opinions as easily as they could in the days of paper, ink, and radio.
In the year 2010 and 2011, many states were trying to impose sales taxes on Internet retailers. The most popular method was to use nexus laws based on the presence of affiliates in the state that was trying to collect the tax.
Amazon fought these efforts and continues to do so. And a handful of states realized that imposing sales taxes would cause many Internet retailers to shut down their affiliate programs altogether, resulting in lost income tax.
Nevertheless, I predict continued efforts by state governments to collect sales tax. Ultimately, if widespread state sales taxes are successfully imposed (and I hope these efforts fail), it will probably be some uniform sales tax that must be remitted to all 50 states.
But state efforts to collect sales tax may be the least of our worries.
The federal government recently tried to pass the Stop Online Piracy Act (SOPA). The language in this bill is so broad and far-reaching that it could effectively shut down user-generated content websites like YouTube, Imgur, and thousands more.
Not to mention SOPA would give the federal government the power to shut down any website they want, anytime they want to. SOPA is probably one of the biggest threats to free speech we’ve ever faced.
So while nearly-bankrupt state governments do their best to collect sales tax from Internet retailers, I predict the federal government will continue its efforts to regulate and control the Internet. (Keep this in mind come election time… and kick out the bastards who wrote and sponsored SOPA.)
Business Prediction #4:
Dwolla Steals Business from PayPal and Credit Cards
If you haven’t heard of Dwolla yet, let me be the first to initiate you.
Dwolla is a brand new payment system that was designed from scratch to destroy credit cards. Instead of paying a fee plus a percentage on transactions (not to mention a minimum monthly maintenance fee), you pay just $0.25 for any transaction over $10.
In more detail:
- Creating your own Dwolla account is free.
- Transactions under $10 are free.
- Transactions over $10 are a flat $0.25.
- And there are no maintenance fees.
I have a merchant account, and I’ve never liked it. I feel like they intentionally gouge me every month. I’m a low-volume user, so my merchant fees are sometimes equal to how much I make!
It’s pretty ridiculous, but up until now I had no other viable options besides PayPal. This year, I’ll be switching to Dwolla — possibly even killing my merchant account.
Dwolla’s advantage is not only in its low flat-fee transaction model. It’s also in Dwolla’s use of smart phones as a payment device to buy things at local stores and even order products online.
Given the widespread frustration with excessive credit card and PayPal fees and the trend toward smart phones powering the growth of local businesses, I predict Dwolla is going to gain serious traction in 2012. It’ll quickly become the preferred way to send and receive payments.
Business Prediction #5:
Hope & Fear Will Drive Consumers in 2012
Two major events are happening this year. The first is the 2012 U.S. presidential election. The second is the arrival of December 21, 2012, the final date on the Mayan calendar and what some believe will be the end of the world.
Americans and consumers throughout the western world are financially battered. Despite all the talking heads declaring “the end of the recession,” the average person doesn’t see it. Most people continue to struggle.
As we enter 2012, there are two primary emotions driving people: hope and fear. Many are hoping for good things to happen. But just as many or more fear what’s ahead.
Personal liberties are disappearing rapidly in the U.S. The likelihood of a dollar or Euro collapse becomes more probable every month. And continued economic hardship seems like a near certainty.
My prediction? Businesses that are able to tap into these two dominant emotions — hope and fear — will be positioned to prosper this year.
More Business Predictions for 2012
If you’d like to read more predictions and business advice for 2012, I recommend these articles to you (each opens in a new tab or window):
- 10 Predictions for 2012 – by Perry Marshall
- My New Year’s Message – by Rakesh Agrawal
- Online Marketing Trends for 2012 – by Chip Street
- 5 Trends That Will Shape Small Business in 2012 – by John Jantsch
I wish you all the best in the new year.
-Ryan M. Healy
P.S. Have any business predictions of your own? I’d love to hear them. Just leave a comment below.