That Free Thing, a platform that amassed over 450,000 members, launched a "Vendor Network" on October 26. The move signals a shift from its original business model, which relied heavily on membership recruitment, to a focus on discounted deals and coupons after membership growth slowed.
Originally, That Free Thing members sold access to the service itself. The company's compensation plan paid commissions directly to members based on how many new people they enrolled. Sales of membership were tied to recruitment, effectively making them the same activity. The promise of "free stuff" took a backseat to the push for new sign-ups.
The new Vendor Network aims to create an additional revenue stream for members. They earn a commission for each deal or coupon campaign run by businesses they personally sponsor. A member convinces a business to join the network. If that business pays to run a campaign, the sponsoring member receives 5% of every transaction the business makes within the network.
Businesses joining the Vendor Network are guaranteed 60% of the sale price. That Free Thing allocates 30% for member commissions, and the remaining 10% goes to the company. Consider a business offering a $100 product for $50. It would retain $30 from that sale. The business loses $70 through the discount and payments to the That Free Thing Vendor Network.
This loss compounds with the marketing strategy. Businesses target 450,000 That Free Thing members located globally, not specific localized markets. Daily deal models typically require local targeting to succeed, unless the vendor is a large multinational corporation.
Deals offered through the Vendor Network will also appear alongside "thousands of other Daily Deal offers from all over the world." This dilutes the value the network offers to participating businesses. With businesses retaining just 60 cents on the dollar from an already discounted price, offered to a non-local market of 450,000 members, the network's attractiveness remains uncertain. Groupon, by comparison, has 35 million members.
That Free Thing's stated goal is to become the largest daily deal aggregator in the world. The Vendor Network, which just launched in full on October 26, is central to this ambition.