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The Daily Deal Divide

THE DEAI DIVIDE DAII Consumers are loving the discounts and promotions they receive through Daily Deal sites like Groupon and Living Social. However, the sites have met mixed reviews from merchants, who complain daily deals don't encourage repeat business or increased spending. Here, we dive into this daily deal disconnect. GROWTH OF LOCAL-DEAL SITES Skyrocketing Consumer Spending Daily Deal sites are exploding. Analysts predict that by 2015, consumer spending on daily or instant deals and flash sales will top $4 billion. U.S. Deal Spending Forecast (in millions) More Spending Is Spurred By: lllle More deal site users • More active registered users • Greater specialization of deal sites Greater number of 2014 2013 $2,455 $2,987 $3,564 2010 2011 2012 2015 $4,171 transactions $873 $1,970 *Includes daily deals, instant deals, and flash sales CONSUMER REVIEWS Consumers Can't Get Enough Deal-Mavens Love Buying Nearly half of all consumers now use Daily Deal sites, and many of those who do subscribe to more than one site. Across several popular deal sites-including the two most popular, Groupon and LivingSocial-roughly 60 percent of subscribers have made a recent purchase. Percent of Subscribers Who Bought a Daily Deal in the Last 90 Days 60% 59% 56% 60% GROUPON 60% LIVINGSOCIAL of online consumers of subscribers receive GOOGLE OFFERS use or search Daily Deal sites. emails from two or more local deal sites a day. WOOT! Desperately Seeking Savings Daily Deal subscribers love their savings: 60 percent of those who subscribe to Daily Deal emails are actively checking their email at least once a day for promotions. Frequency of Users (18-34) Accessing Daily Deal Emails 38% 22% 23% Once a day Several times a day A few times a week Once a week 5% 1% 2% 2% A few times a month Once a month Less than once a month Never THE MERCHANTS' TAKE Strong On New Business Daily Deal sites bring in new businesses to participating merchants: 62 percent of the people who buy the deals aren't frequent customers. Who Buys Daily Deals? 38% 27% 31% Frequent Customers Infrequent Customers New Former Customers Customers Weak On Repeat Business Though new customers come in for daily deals, many businesses say promotions like these don't encourage repeat business. Satisfaction With Repeat Business After Running a Groupon Local Businesses That Would Advertise With Groupon Again 17% 45% 49% Satisfied 82% Yes No Unsatisfied 1% Unsure 6% Unsure Deals Don't Encourage Spending Though merchants may hope to attract steady business and bigger sales, many customers spend at or below the price of the daily deal. When I Redeemed My Most Current Coupon/Deal, I Spent... 6% 41% 22% 18% 13% I haven't redeemed it yet Less than Close to the A lot more than the I don't recalu the coupon coupon amount coupon amount amount LOOKING AHEAD Though analysts predict Daily Deal sites will grow over the next few years, the consumer-merchant disconnect and several other factors suggest that might not be the case. Sales Slump Consumer Fatigue Daily Deal giant Groupon saw traffic fall nearly 9 percent in July, and a sharp drop in revenue earlier in the year. Analysts speculate several possible reasons. For some consumers, the barrage of emails is getting to be too much. 60% • Competition growing supply faster than demand 52% • Merchants now negotiating better • Merchants issuing smaller deals of Daily Deal subscribers feel overwhelmed by the number of deal emails they receive. of Daily Deal subscribers believe the industry is getting crowded with too many sites. · Customer fatigue Another Bubble Burst? Sky-high valuations of Groupon have some speculating it's part of another bubble that's about to burst. An increasingly crowded market, consumer fatigue, and many unsatisfied merchants mean Daily Deal sites will have an uncertain path ahead of them. SOURCES: COOPER MURPHY | EMARKETER | FORESEE | BIA/KELSEY | BNET I FORRESTER | PRICEGRABBER | YAHOO! MAIL | IPSOS | CHICAGOBUSINESS.COM BuySellAds. .com

The Daily Deal Divide

shared by ColumnFive on Oct 29
Consumers are loving the discounts and promotions they receive through Daily Deal sites like Groupon and Living Social. However, the sites have met mixed reviews from merchants, who complain daily dea...


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