Groupon Revealed: The Pros and Cons of Daily Deals

GROUPON REVEALED: THE PROS & CONS " DAILY DEALS HOW DOES IT WORK? V $#@! Site JABBER IT'S A DEAL! GROUP COUPONS: (GROUPONS) A deal is posted 24 HOUR COUPONS: (WOOT!) O This deal could be anything from discounted beauty service to a half price dinner. These deals tend to be merchandise, but can be service-based. DEAL A minimum number of people are needed for this deal to be viable; you are encouraged to email friends. O Deals are uSually posted by midnight and lasts only as long as supplies do. DEAL O Typically, there are only 24 hours to buy into the deal before a new one is posted. Avg 24 Hours THE CONSUMER If enough people buy into the deal you receive a 'groupon' that you then take to the local merchant. 6 You have yourself a deal! DEAL ON! WHY DOES IT WORK? MERCHANT The merchant is able to offer discounted merchandise or services because multiple people are making the same purchase. When consumers purchase the deal on a Daily Deal site the merchant is guaranteed that 'x' amount of people will be coming in to get a particular service or item. On average, these coupons offera retention rate of 14%, far higher than the 1% retention rate seen from traditional coupons. CONSUMER Daily Deal sites have forums of fellow 'daily dealers' connecting the consumer to a social network of other consumers, offering advice or reviews on the featured goods and services. Daily deals offer consumers deep discounts. Consumers that participate in daily deals typically save between $10 to $30 on their purchase. With an average expiration time of 24 hours, most sites offer a new deal each day. Daily Deal sites will often send daily emails to keep you updated. PROS CONS Inexpensive Deals This is the most appealing feature of daily deal websites. Most sites now offer inexpensive or free shipping, making that deal all the more sweeter. Lack of Customer Service On most daily deal sites customer service tends to be of little importance. 50% or Bust Ability to Profit Entrepreneurial-minded individuals willing to invest in the advertised deals, can often resale the merchandise at a profit. For merchants there is a minimum deal amount in order to participate in the site. Usually you must be willing to offer a service at, at least 50% of. Social Connectivity Many of these sites have forums where fellow consumers can meet and exchange recommendations and criticisms. No Refunds For most sites, there are no refunds or exchanges. If there is a problem, with a product the consumer must go through the manufacturer rather than the merchant. GROUPON.COM LIVINGSOCIAL.COM PROS CONS PROS CONS Bulk Bargains Coupons offered in bulk mean larger discounts for everyone. The time period to enter into these deals is much longer than other sites, on average 3-4 days. Minimum Discount Merchants must be willing to offer at least 50% their services O Social Connection Living social is now joining the ranks of the social network Hello? Customer Service? Customer service is slow to respond to inquiries and often difficult to contact. or they can not post to Groupon. What Groupon? There have been reports of merchants not honoring/being aware of coupons being offered. giant Facebook. Freebie After 3 friend referrals a customer receives a free deal. BUYWITHME.COM WOOT.COM PROS CONS PROS CONS Bulk Bargains When a friend is referred to the site the consumer No Refund All transactions are final. No refunds. No questions, and a government ID must be shown when redeeming a coupon. O Cheap Tech Woot offers one product at a deep discount in a 24 hour span. Minimum Discount Most of the items are refurbished and when there is a defect or issue the consumer must contact the manufacturer. receives a $10 incentive. Save on Shipping Woot offers a flat $5 shipping rate on all purchases. No Refunds THE MOST POPULAR DAILY DEAL SITES GROUPON WOT OTHER LIVINGSOCIAL BUYWITHME EVERSAVE TIPPR UNIQUE VISITORS TRAFFIC SHARE Over the course of one year, the number of unique visitors to Daily Deal sites has increased by over 600% According to Experian, this is the breakdown of the daily deal market. 8 MILLION 8,278,460 3% 4% 7% 6,926,063 16% E 6 MILLION DAILY DEAL TRAFFIC 43% 4,853,728 4 MILLION 2,249,324 27% 503,538 SEPT 2009 DEC 2009 MAR 2010 MAY 2010 JUN 2010 JUL 2010 AUG 2010 GROWTH AVERAGE DEAL PRICE Unique visitor growth from 2009-2010 $41 $41 $35 740.64 623.31 489.8 8.47 GROUPON LIVINGSOCIAL BUYWITHME WOOT GROUPON LIVINGSOCIAL BUYWITHME Sources: WSJ, Sitejabber.com, Compete.com, BusinessInsider.com, "Groupon: Another Market Success" Robert Murphy, Yipit, Groupon.com, LivingSocial.com, Buywithme.com, Woot.com NUMBER OF UNIQUE VISITORS AUG 2009 OCT 2009 NOV 2009 JAN 2010 FEB 2010 APR 2010