that-free-thing-logoWhen I first reviewed That Free Thing back in April, it was immediately apparent to me that without an actual product of its own, That Free Thing members were simply selling membership to the service.

As a result of this, it was the business itself being sold and as the That Free Thing compensation plan clearly spelled out, members were directly paid a commission based on how many people they brought into the company.

Sales of membership were directly tied into recruitment so essentially with That Free Thing they were one and the same. The ‘free stuff’ side of That Free Thing didn’t really matter, all you had to focus on was recruitment.

After amassing an alleged 450,000+ members it seems the recruitment side of the business has started to die down and the company has decided to try throw its hat into the coupon and ‘daily deal’ markets.

Today we’re going to take a look at what that means for not only That Free Thing members but also the company at large.

The That Free Thing ‘Vendor Network’ as they’re calling it aims to provide members with an additional revenue stream by paying a commission for each deal or coupon campaign run by businesses personally sponsored by members.

That is to say, you convince a business to sign up to That Free Thing’s Vendor Network and if they pay to run a campaign, you earn 5% of every transaction that business does within the TFT Vendor Network.

For businesses, they are guaranteed 60% of the sale price back with 30% put aside for commissions for TFT members and the remaining 10% is paid to That Free Thing.

If a business decided to offer a $100 product for $50, they’d take $30 for the product and lose $70 in discounts and payments to the TFT Vendor Network.

Combine this loss with the fact that you’re marketing to 450,000 TFT members located around the world, rather than specific localised markets – which is really what you need to be using to make discount deals work, unless you’re some giant global corporation marketing in multiple continents.

It should be further noted that deals offered through TFT’s Vendor Network will be added to a stream that ‘will also include thousands of other Daily Deal offers from all over the world‘, further diluting the value the network offers to participating businesses.

For all intents and purposes, having realised that signing up people has to eventually slow down, it appears That Free Thing will now turn to signing up businesses and hoping that ongoing campaigns will keep the company afloat.

With businesses only retaining 60 cents in the dollar off an already discounted price offered to a non-localised market of 450,000 (Groupon by comparison has 35 million members), how attractive That Free Thing’s Vendor Network remains to be seen.

TFT’s Vendor Network was just launched in full yesterday (October 26th) but already the company has announced that its

plan is to become the largest Daily Deal aggregator in the world, and with our Exclusive TFT Deals we are creating value that is unmatched in this industry.

The Daily Deals market is SO HOT right now!

What strikes me is that this market assessment is being made on an already well-established and even potentially saturated marketplace.

Just a week ago, daily deals leader Groupon readjusted the value of their plans to float the company publicly from a $25 billion estimate in June down to a value ‘between $10.1 billion and $11.4 billion’.

Furthermore in assessing Groupon’s push for an IPO, the SEC ‘raised concerns about the way it counts revenue‘.

Now Groupon faces concerns about the viability of its daily deals business model. The novelty of online coupons is wearing off. Some merchants are complaining that they are losing money — and customers— on the deals. And competitors are swarming the marketplace.

“Groupon is a disaster,” says Sucharita Mulpuru, a Forrester Research analyst. “It’s a shill that’s going to be exposed pretty soon.”

Remember, Groupon has 35 million members and has localised markets across the globe. And this is the competition that That Free Thing are hoping to directly take on with their much smaller networks of people who let’s not forget, originally signed on with the company ‘to get free stuff‘.

Following That Free Thing’s launch of their Vendor Network, perhaps a company name change is order.