Why the up and down nature of daily deals sites? customers seem to be noticing that many of the daily deal sites they frequent, i.e. Groupon, Living Social, etc, do not live up to their expectations when purchasing what seems like a phenomenal deal. Many merchants go out of business, treat users like unwelcome patrons when redeeming coupons, etc. Yael Gavish, founder of the coupon resale website Lifesta.com, says about 20 percent of daily deals are never redeemed. Often, the culprit is buyer remorse. Lifesta and similar sites offer a marketplace to sell unwanted vouchers to willing buyers.
Often times, daily deal offers are not enough to keep customers returning to the merchant. So why do businesses use these daily deals? usually struggling businesses will use them as a last effort to get customers through the door.
Most sites send reminder emails when deals are nearing expiration, and Dealradar keeps track of deals from various sites in a single email. Other options include setting a reminder in your cell phone, as Rome does, or marking expiration dates on a calendar or planner.
http://www.oregonlive.com/living/index.ssf/2011/11/groupon_daily_deal_sites_offer.html
1 comment:
More thoughts on why businesses should hate Groupon
Groupon and the other daily deal sites ARE a terrible deal for the small businesses that use them. The economics of it don't seem to make sense for most healthy businesses. Groupon typically pays in 3 equal installments at 5 days, 30 days and 60 days. This is essentially a short term loan for the business, that gets paid back at a very high rate (the value of the discount - often up to 75%). In return, the business is getting bargain seeking customers of Groupon, not customers of their business. For a small business that doesn't have the cash flow to support the rush of customers, it can be even more daunting. A small London bakery recently wiped out the profits for the year because of the popularity of the deal on groupon. They sold far more than they could handle at this discount rate, needed to hire temporary staff to fill the orders (as opposed to letting down the customers) and lost roughly $20,000 on the deal. They may have created some new repeat customers on the deal, but 20,000 in advertising might have done alot better for them. Additionally, if she had done direct advertising, the customers she gained would be her own - the customers she got through Groupon primarily solidifies Groupon's customer base, who will continue to check back for the next deal.
http://techcrunch.com/2011/06/13/why-groupon-is-poised-for-collapse/
http://www.dailymail.co.uk/femail/article-2064208/Cupcake-calamity-Website-discount-deal-leaves-baker-swamped-orders-102-000-cakes-wipes-profits.html
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