"All About Daily Deal/ Group-buying sites"

[King]

there was an interesting discussion on radio national this morning on group buying and daily deals sites - worth a listen
http://www.abc.net.au/radionational/...last3f/3801754

[kloud]

Haven't been here in ages and just wanted to pop by and add my two cents. It seems that there's a lot of mixed emotions with daily deals, to be honest I don't think it's going to slow down any time soon but I'd love to hear from other business owners and there daily deals experience.

Has anyone here got any positive and negative experiences with running a deal. I have some friends involved in the space they also have mixed feedback from merchants - some love it and some wish they never even bothered.

Look forward to opening up this discussion again

[MatthewKeath]

The key is returning business. If you don't get that, or are not able to up sell them something then I don't believe it's worth it for the merchant (small business)

Research has shown a softening in the market, especially in the small business demographic. It's very hard to up sell, as people who use deal websites rarely spend over what the coupon is worth, and repeat business is also difficult because most people who use these sites are only motivated by price.

Creating a retail deal which looses money can be a tough thing for small business to absorb, and some small businesses have been brought to the wall by making not so well thought out deals.

Because they are so new, there is not yet a lot of hard data to show how many merchants will run a deal in the future.

Daily deal sites are here to stay however. Large companies interested in brand awareness, small businesses doing it smart, and companies wanting to get rid of surplus stock will keep them busy.

For anyone who has not yet read about the cupcake farce, it's an entertaining story of how not to do daily deals.

Cupcake story here
Interesting read on Groupon here

[Netboost SEO]

It will be interesting to see how the market evolves - it seems like there is anew deal site each month - and apparently groupon is yet to turn a sustainale profit as they have to spend all their revenue on ads & acquisitions of rivals just to keep their lead

Doesn't seem sustainable to me!

[SweetBusinessDeals.com.au]

Hi Matt,

I can definitely agree with some sort of market softening, especially as some business owners realise that group buying/daily deals isn't for their business model.

This report by Telsyte is a few months old but it shows that 90% of the merchants interviewed were happy with their deal campaign and 85% of those interviewed would be happy to do it again.

I think they surveyed over 300 merchants or so. It's a good read for those wanting to get into the space or those considering on running a deal themselves.

http://www.slideshare.net/syip/telsy...y-2011-9532512

Cheers,

Paul Serra

Sweet Business Deals

Originally Posted by MatthewKeath

The key is returning business. If you don't get that, or are not able to up sell them something then I don't believe it's worth it for the merchant (small business)

Research has shown a softening in the market, especially in the small business demographic. It's very hard to up sell, as people who use deal websites rarely spend over what the coupon is worth, and repeat business is also difficult because most people who use these sites are only motivated by price.

Creating a retail deal which looses money can be a tough thing for small business to absorb, and some small businesses have been brought to the wall by making not so well thought out deals.

Because they are so new, there is not yet a lot of hard data to show how many merchants will run a deal in the future.

Daily deal sites are here to stay however. Large companies interested in brand awareness, small businesses doing it smart, and companies wanting to get rid of surplus stock will keep them busy.

For anyone who has not yet read about the cupcake farce, it's an entertaining story of how not to do daily deals.

Cupcake story here
Interesting read on Groupon here

[george.p]

The concept is great - pay per lead, rather than making money off the initial service.

But the posts above are right - people who buy coupons are doing so so they can save money, not so they can discover new places to eat, or new businesses to engage with.

Plus, with a 50% commission on many of these websites, I don't like the idea of them making as much as I do when I'm the one doing all the work.

Just my 2 cents.

[daydreamer]

The more popular sites are still trying to insist on 50% commission, especially for first time deals. The smaller sites seem willing to do for around 25% or 30%.

[SweetBusinessDeals.com.au]

So the main negative feedback I'm feeling here is the high commission structure that a majority of these sites up hold. Is this the biggest deal breaker when you look at possibly running a deal with a site? Some of the BIG consumer sites have been known to drop their commissions down to 15%-20% but I guess it's for deals that they think will go gang busters.

If 50% is too much and I know it doesn't suit every business model what do you think is reasonable in regards to commission

And

What do you also look at when potentially choosing a site to work with? i.e demographics, database, pre and post customer service?

Love to hear your feedback

Cheers,

Paul Serra

[AgentMail]

I wonder if there will be a trend of 'fixed price' daily deals similar to what has happened in the real estate industry - perhaps a 'capped commission'

I think the problem is people's own experience with the deal sites.

For example, I have purchased deals that have expired before I used them. Great for the business owner you might think, but if they are preparing for these deals, with additional stock, staffing etc. plus making a very small margin, on the idea that they will get repeat custom, this is not really a winning scenario.

Similarly, of the businesses we have bought deals for, from hotels, pest control, cupcakes, restaurants - not a single one have a gone back to for a second visit - Why? Not because their service or product was bad, but because by the time I even consider it, there is another deal for another hotel/restaurant etc. at 60% cheaper than if I went back to the original place.

To answer your question, Paul, at least from my opinion... The commission percentage is absolutely the first barrier, especially for any business that does not have big margins. The second is definitely the effectiveness of the deal to generate repeat custom. So far, I have seen lots of 'happy' daily deal business, that talk about the great response they had to the deal, but not a lot of info about the actual repeat custom that it generates for them

[SweetBusinessDeals.com.au]

Hi AgentMail,

Thanks for the feedback and I like the idea of capped commission, it would be a good move for merchants, especially those with smaller margins to work with.

I think you hit the nail on the head about repeat customers and their experience. I too have bought deals on restaurants and when I was thinking of going back to the particular place, my bargain hunting nature kicked in and I found a similar offering at a discounted price. But I've also gone back to the 1st restaurant just because of the quality of the food and service and I'm sure I will be going back there in the future. So I guess they've got a repeat customer with me

If quality offering and service is given by the merchants then I think there's always the chance of repeat customers after all group buying/daily deals is about getting them in the door so you can "potentially" turn them into loyal repeat customers.

I think if the commission was lowered then this would help offset the internal expenses needed to service a bigger customer base.

I guess deal sites and merchants have to work out a strategy where repeat business can take place i.e a 5% voucher for the next visit, marketing to their new database of customers - then the loop of acquiring and retaining a new customer could actually take place. If a merchant measures the metrics correctly the they can decide if it was successful or not.

It really comes down to which deal site you feature with and how they manage pre and post deal service/ follow-up and customer acquisition and retention.

Cheers,

Paul Serra

Originally Posted by AgentMail

I wonder if there will be a trend of 'fixed price' daily deals similar to what has happened in the real estate industry - perhaps a 'capped commission'

I think the problem is people's own experience with the deal sites.

For example, I have purchased deals that have expired before I used them. Great for the business owner you might think, but if they are preparing for these deals, with additional stock, staffing etc. plus making a very small margin, on the idea that they will get repeat custom, this is not really a winning scenario.

Similarly, of the businesses we have bought deals for, from hotels, pest control, cupcakes, restaurants - not a single one have a gone back to for a second visit - Why? Not because their service or product was bad, but because by the time I even consider it, there is another deal for another hotel/restaurant etc. at 60% cheaper than if I went back to the original place.

To answer your question, Paul, at least from my opinion... The commission percentage is absolutely the first barrier, especially for any business that does not have big margins. The second is definitely the effectiveness of the deal to generate repeat custom. So far, I have seen lots of 'happy' daily deal business, that talk about the great response they had to the deal, but not a lot of info about the actual repeat custom that it generates for them