All Articles Tagged "discount websites"
Should You Give Groupon a Go?
(Creators.com) — “Social media” is the buzzword of the moment in online commerce, thanks largely to the success of “The Social Network,” a movie about Facebook founder Mark Zuckerberg. Just about every e-commerce website is looking to add a “social media” element and to find new ways to harness “the power of the collective” to create new business models. One recent ripple in the “social media’ stream are online coupon promotion websites, the most popular of which are Groupon.com and LivingSocial.com.
There are subtle differences between the Web sites, but most work like this:
— You, a merchant with stuff to sell, contact the site and offer a special deal to your customers — an “exclusive” deal not available anywhere else — usually at a steep discount (50 percent to 90 percent off list price is not uncommon).
— The site posts your “deal,” with a specific end date (similar to an eBay listing), and people sign up for it.
Should You Give Groupon a Go?
(Creators.com) — “Social media” is the buzzword of the moment in online commerce, thanks largely to the success of “The Social Network,” a movie about Facebook founder Mark Zuckerberg. Just about every e-commerce website is looking to add a “social media” element and to find new ways to harness “the power of the collective” to create new business models. One recent ripple in the “social media’ stream are online coupon promotion websites, the most popular of which are Groupon.com and LivingSocial.com.
There are subtle differences between the Web sites, but most work like this:
— You, a merchant with stuff to sell, contact the site and offer a special deal to your customers — an “exclusive” deal not available anywhere else — usually at a steep discount (50 percent to 90 percent off list price is not uncommon).
— The site posts your “deal,” with a specific end date (similar to an eBay listing), and people sign up for it.
The Down Low on Daily Deal Sites
(Smart Money) — 1) “50% off? Not really.”: Steep discounts are the cornerstone of the pitch for daily deal web sites such as Groupon and LivingSocial , which promise 50% off or better at a local restaurant, spa, fitness center or other shop – if enough people sign up (and pre-pay) before the limited-time offer expires. But the discount may be much less once you factor in taxes, tip and any un-covered portion of the bill. In February, more than 3,000 Groupon users paid $10 for a $20 FTD voucher before Valentine’s Day, only to find prices at the special voucher-redemption page $5 to $10 more expensive than what other visitors to the site saw. Groupon spokeswoman Julie Mossler says the price discrepancy was unintentional, and that customers got refunds.
But critics say these kinds of price discrepancies may be an unintended consequence of the business model. Because businesses recoup so little — often just 25% of the voucher price after fees – there may be an incentive to price deals to the merchant’s advantage. “We’re starting to see some price manipulation going on, so the discount doesn’t hurt their margins as much,” says Greg Sterling, a senior analyst with Opus Research. To avoid bill shock, check the voucher restrictions for excluded dates and any extra charges the voucher doesn’t cover, and the business’s site to calculate the total tab. Then ask yourself if it’s still a deal, even at a higher price (or smaller discount), suggests social and behavior psychologist Matt Wallaert of digital strategy firm Churnless .
The Down Low on Daily Deal Sites
(Smart Money) — 1) “50% off? Not really.”: Steep discounts are the cornerstone of the pitch for daily deal web sites such as Groupon and LivingSocial , which promise 50% off or better at a local restaurant, spa, fitness center or other shop – if enough people sign up (and pre-pay) before the limited-time offer expires. But the discount may be much less once you factor in taxes, tip and any un-covered portion of the bill. In February, more than 3,000 Groupon users paid $10 for a $20 FTD voucher before Valentine’s Day, only to find prices at the special voucher-redemption page $5 to $10 more expensive than what other visitors to the site saw. Groupon spokeswoman Julie Mossler says the price discrepancy was unintentional, and that customers got refunds.
But critics say these kinds of price discrepancies may be an unintended consequence of the business model. Because businesses recoup so little — often just 25% of the voucher price after fees – there may be an incentive to price deals to the merchant’s advantage. “We’re starting to see some price manipulation going on, so the discount doesn’t hurt their margins as much,” says Greg Sterling, a senior analyst with Opus Research. To avoid bill shock, check the voucher restrictions for excluded dates and any extra charges the voucher doesn’t cover, and the business’s site to calculate the total tab. Then ask yourself if it’s still a deal, even at a higher price (or smaller discount), suggests social and behavior psychologist Matt Wallaert of digital strategy firm Churnless .
Discount Sites Expensive for Many Retailers
(Businessweek) — More than 60 million people subscribe to Groupon, the discount-coupon website, and the Chicago company says an additional million are joining every week. Shoppers clearly love the 50 percent to 90 percent savings they can snap up on smartphones. Small retailers that partner with the growing site and with such competitors as LivingSocial and BuyWithMe report mixed results. Rice University marketing professor Utpal Dholakia surveyed 150 small businesses that undertook Groupon promotions from June 2009 to August 2010. He found the promotions profitable for 66 percent of the businesses surveyed and unprofitable for 32 percent. More than 40 percent indicated they would not run such a promotion again.
Groupon takes exception to Dholakia’s findings. “We run 900 deals a day and we’ve repeatedly polled 30,000 merchants, which is everyone we’ve worked with to date. When we ask, ‘Would you want to be featured again or recommend us to another merchant?’ 95 to 96 percent say ‘yes,’” says company spokeswoman Julie Anne Mossler. She says Dholakia polled businesses too soon, before they had a chance to calculate total return on investment on their deals. “His sample size was really, really small. Besides, we don’t position ourselves as a profitability machine,” Mossler says. For some entrepreneurs, the promotions work well. Melissa Carias, 33, has twice offered half-off coupons through LivingSocial, gaining 14 regular clients for her dance fitness studio, Vivafit, in Guttenberg, N.J. “It’s so expensive to advertise. This is a way for me to reach new people and it’s my job to keep them around so they buy another package,” she says.
