Daily Deal SitesBy: Avery Bowser, Kaleigh Morrison, Julia Rosenberg & Mary Wilson #SMdeepdive
How It All Began•2001: Vente-privee.com•2004: Woot.com•2006: over 100 daily deal sites in United States•2008: Groupon•2009: LivingSocial•2011: Scrounge•Facebook attempted daily deal feature, but canceled due tolack of success•According to a study released by BIA/Kelsey, gross revenuesare projected to grow from the current $873 million to $3.9billion by 2015
What is Social Couponing?● Local businesses team up with social coupon sites● Social couponing site informs members of the deal in their city ○ zip code ○ specify interests● Social aspect: ○ need minimum number of deals ○ referrals=benefits for you
Most Common Sites● Groupon● LivingSocial● TravelZoo● Yipit● BuyWithMe.com
LivingSocialFounded in 2007Employees from Revolution Health GroupStarted with small apps on Facebook–Visual Bookshelf app–PickYourFive–BuyYourFriendADrink.comDaily deals is highest grossing aspectLivingSocial Escapes
GrouponLaunched in 2008500 markets44 countriesOwns international sites–MyCityDeal (Europe)–Beeconomic (Singapore)Groupon GetawaysGroupon Now app–“I’m Hungry” or "Im Bored"Financial troubles
High Grossing Deals•LivingSocial and Amazon.com offered members a$20 gift card for $10–voucher attracted 1.4 million purchases•LivingSocial offered two tickets for $9 viaFandango’s ticket service for any movie–Sold 1 million tickets in 2 days, 780,000 on day onealone•Groupon offered a seven-night resort stay for $399–2,752 bought-73% discount
The Days of Coupon Clipping are Gone!● LivingSocial commercial● Groupon commercial ○ Super Bowl ○ Controversial
Best PracticesWhen Groupon works and when it doesn’t.
When to use Groupon● Excess inventory ○ Clear the warehouse● Excess capacity ○ Fill the cruise boat● Repeat sales ○ Hope they come back for more
● Additional sales ○ Tempt them to buy more● Attract a young demographic ○ 68 percent of users are aged 18 to 34● Generate buzz ○ Expose your product to new customers
When not to use Groupon ● Unprepared for large influxes ○ May generate demand you cannot meet ● When you never have repeat sales ○ Make sure the investment’s worth the cost It’s easy to get swept away by trends andpromises of future earnings but Groupon is not for everyone.
Calculate the Repercussions ● You will reduce your product or service by at least 50% ● Groupon gets between 30% and 60% of that reduced price ● When will you breakeven?
Case Study: Posies Bakery and Café Groupon Gone Wrong “Using Groupon was the single worst decision I’ve made as a business owner thus far.” Jesse, Owner
What Went Wrong?● Publicity didnt compensate for hit to profit● Average sale: $5● Groupon: Pay $6 for $13 of product● Groupon took 50%● Minimal training● Sold 1,000 Groupons, valid for 6 months● Fraud● Opposite of yield management● Lost $10,000● Yelp ratings fell
Interview: Sucharita Mulpuru ● @smulpuru, Analyst at Forrester Research ● Many consumers subscribe but dont buy ● Half of deals expire unused ● Aversion to more emails
Case Study: Lauren’s Salon Spa Groupon Success Story Lauren, Owner
Whats Next?What experts predict for the future of daily deal sites
Will Daily Deal Sites Survive?•Local businesses have dwindling marketing choices – oldforms are slowly dying off (ex – Yellow Page directories?)•Daily Deal companies skip a risky step for merchants:advertising
The Breakdown•Groupon: “Too big to fail right now,” but expectedto fade out (think MySpace)•LivingSocial: Less successful than Groupon, butruns “great deals” and maintains good relationshipswith merchants
A Positive Outlook on the Future @saparra14, representative for Scrounge: "a lotof savings for college students. Since they are still creatingawareness and a customer base I think it will get really big inthe year to come if they offer students coupons that will beused"
On the other hand ... @erichsparks, Ambassador of SocialResponse for @uncollege: "These companies are so youngand the business model is still years from beingsustainable. I dont know if theyll be able to do it. I thinktheyll switch from catering to "coupon customers" andfocus more on retaining existing customers. At least thatswhat I would do."
Sites May Need to Change Policies toIncrease/Continue Success•Market is becoming over-saturated (Groupon, LivingSocial, GoogleOffers, etc) – companies need to distinguish themselves•Companies that focus on creating functional and emotional bondshave higher retention rates (84% vs 30%)•Companies should pace themselves
Companies Collaborate•Google Offers distributes deals from 15+ other sites (GiltCity, Juice in the City, kgbdeals, etc.)•Groupon dismissed offer of $6 billion – now pitching IPOof $11 billion to potential investors
Going Mobile•“Groupon Now”•Daily Deal sites rely on impulsive decisions – mustadvertise deal at ideal moment