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Daily Deal Sites By: 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 to lack of success • According to a study released by BIA/Kelsey, gross revenues are projected to grow from the current $873 million to $3.9 billion 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
LivingSocial Founded in 2007 Employees from  Revolution Health Group Started with small apps on Facebook  – Visual Bookshelf app – PickYourFive  – BuyYourFriendADrink.com  Daily deals is highest grossing aspect LivingSocial Escapes
Groupon Launched in 2008 500 markets 44 countries Owns international sites – MyCityDeal (Europe) – Beeconomic (Singapore)  Groupon Getaways Groupon Now app – “ I’m Hungry” or "I'm 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 via Fandango’s ticket service for any movie   – Sold 1 million tickets in 2 days, 780,000 on day one alone • 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 Practices When 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 and promises 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 Jesse, Owner “ Using Groupon was the single worst decision I’ve made as a business owner thus far.”
What Went Wrong?  Publicity didn't 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 Minimal repeat customers
Interview: Sucharita Mulpuru @smulpuru,  Analyst at Forrester Research Many consumers subscribe but don't buy   Half of deals expire unused Aversion to more emails
Case Study: Lauren’s Salon Spa Groupon Success Story Lauren, Owner
Lauren's Salon Spa
The Benefits of Groupon
Interview: Rakesh "Rocky" Agrawal @rakeshlobster  Principal Analyst at  reDesign Occasional guest on TechCrunch, Bloomberg TV, CNBC 4,000 followers
 
 
 
How-to groupon video
 
What's Next? What experts predict for the future of daily deal sites
Will Daily Deal Sites Survive? • Local businesses have dwindling marketing choices – old forms 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 expected to fade out (think MySpace) • LivingSocial: Less successful than Groupon, but runs “great deals” and maintains good relationships with merchants
                                                       @saparra14,  representative for Scrounge :  "a lot of savings for college students. Since they are still creating awareness and a customer base I think it will get really big in the year to come if they offer students coupons that will be used" A Positive Outlook on the Future
On the other hand ...                         @erichsparks,  Ambassador of Social Response for @uncollege : "These companies are so young and the business model is still years from being sustainable. I don't know if they'll be able to do it. I think they'll switch from catering to "coupon customers" and focus more on retaining existing customers. At least that's what I would do."
Sites May Need to Change Policies to Increase/Continue Success      • Market is becoming over-saturated (Groupon, LivingSocial, Google Offers, etc) – companies need to distinguish themselves • Companies that focus on creating functional and emotional bonds have higher retention rates (84% vs 30%) • Companies should pace themselves
Companies Collaborate • Google Offers distributes deals from 15+ other sites (Gilt City, Juice in the City, kgbdeals, etc.) • Groupon dismissed offer of $6 billion – now pitching IPO of $11 billion to potential investors
Going Mobile • “ Groupon Now” • Daily Deal sites rely on impulsive decisions – must advertise deal at ideal moment
 

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Daily Deal Sites

  • 1. Daily Deal Sites By: Avery Bowser, Kaleigh Morrison, Julia Rosenberg & Mary Wilson     #SMdeepdive
  • 2. 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 to lack of success • According to a study released by BIA/Kelsey, gross revenues are projected to grow from the current $873 million to $3.9 billion by 2015
  • 3. 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
  • 4. Most Common Sites    Groupon LivingSocial TravelZoo Yipit BuyWithMe.com
  • 5. LivingSocial Founded in 2007 Employees from Revolution Health Group Started with small apps on Facebook – Visual Bookshelf app – PickYourFive – BuyYourFriendADrink.com Daily deals is highest grossing aspect LivingSocial Escapes
  • 6. Groupon Launched in 2008 500 markets 44 countries Owns international sites – MyCityDeal (Europe) – Beeconomic (Singapore) Groupon Getaways Groupon Now app – “ I’m Hungry” or "I'm Bored" Financial troubles 
  • 7. 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 via Fandango’s ticket service for any movie  – Sold 1 million tickets in 2 days, 780,000 on day one alone • Groupon offered a seven-night resort stay for $399 – 2,752 bought -73% discount
  • 8. The Days of Coupon Clipping are Gone! LivingSocial commercial Groupon commercial Super Bowl Controversial                       
  • 9. Best Practices When Groupon works and when it doesn’t.
  • 10. When to use Groupon Excess inventory Clear the warehouse Excess capacity Fill the cruise boat Repeat sales Hope they come back for more
  • 11. 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
  • 12. 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 and promises of future earnings but Groupon is not for everyone .
  • 13. 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?
  • 14. Case Study: Posies Bakery and Café Groupon Gone Wrong Jesse, Owner “ Using Groupon was the single worst decision I’ve made as a business owner thus far.”
  • 15. What Went Wrong?  Publicity didn't 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 Minimal repeat customers
  • 16. Interview: Sucharita Mulpuru @smulpuru,  Analyst at Forrester Research Many consumers subscribe but don't buy   Half of deals expire unused Aversion to more emails
  • 17. Case Study: Lauren’s Salon Spa Groupon Success Story Lauren, Owner
  • 19. The Benefits of Groupon
  • 20. Interview: Rakesh "Rocky" Agrawal @rakeshlobster  Principal Analyst at  reDesign Occasional guest on TechCrunch, Bloomberg TV, CNBC 4,000 followers
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  • 26. What's Next? What experts predict for the future of daily deal sites
  • 27. Will Daily Deal Sites Survive? • Local businesses have dwindling marketing choices – old forms are slowly dying off (ex – Yellow Page directories?) • Daily Deal companies skip a risky step for merchants: advertising
  • 28. The Breakdown • Groupon: “Too big to fail right now,” but expected to fade out (think MySpace) • LivingSocial: Less successful than Groupon, but runs “great deals” and maintains good relationships with merchants
  • 29.                                                       @saparra14, representative for Scrounge : "a lot of savings for college students. Since they are still creating awareness and a customer base I think it will get really big in the year to come if they offer students coupons that will be used" A Positive Outlook on the Future
  • 30. On the other hand ...                         @erichsparks, Ambassador of Social Response for @uncollege : "These companies are so young and the business model is still years from being sustainable. I don't know if they'll be able to do it. I think they'll switch from catering to "coupon customers" and focus more on retaining existing customers. At least that's what I would do."
  • 31. Sites May Need to Change Policies to Increase/Continue Success      • Market is becoming over-saturated (Groupon, LivingSocial, Google Offers, etc) – companies need to distinguish themselves • Companies that focus on creating functional and emotional bonds have higher retention rates (84% vs 30%) • Companies should pace themselves
  • 32. Companies Collaborate • Google Offers distributes deals from 15+ other sites (Gilt City, Juice in the City, kgbdeals, etc.) • Groupon dismissed offer of $6 billion – now pitching IPO of $11 billion to potential investors
  • 33. Going Mobile • “ Groupon Now” • Daily Deal sites rely on impulsive decisions – must advertise deal at ideal moment
  • 34.  

Editor's Notes

  1. -36% of subscribers never bought a deal -only 26% purchased 4 or more -46% of customers fail to redeem offers prior to expiration -29% of respondents discontinued/terminated deals because were sick of emails -49% never even signed up bc of annoying emails **36% never heard of such sites?!