The business model for these kinds of sites is that they count on enough folks coming in on the deal -- typically, X amount of dollars for a product or an experience like dinner at a restaurant --to make it still profitable for them because of volume sales. Once critical mass is reached they award the coupons to those who ordered them.
I wasn't able to determine if they ever miss the number and don't deliver the deal. Julie Anne Mossler, spokesperson for Groupon was quoted in a recent Denver Post article as saying: Groupon doesn't promise merchants they'll make money through Groupon.tiojusloafillweb.ml/map15.php
Instead, the site encourages merchants to seek other ways to retain these new customers. Read more of this article: Get group discounts while the trend lasts - The Denver Post. And then I found the alert aggregator Flockmaster. And new in the 3rd quarter of Yelp has quietly rolled out Yelp Deals in a few cities.
Join all these group coupon sites and you may never pay full price for a burger, pilates class or organic facial ever again. At least that's what the "Groupawn" Josh Stevens is trying to do as documented by his blog liveoffgroupon. For the retailer, there's the risk of too much of a good thing. Retailers can get so many new customers with a Groupon that it can rock their world for the worse with an overabundance of sales for one particular service or offering.
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Local shops nationwide are pulling in thousands of new customers with group coupons online, but the deals can sometimes work too well, turning marketing into a game of retail roulette. And a similar one in the Miami Hearld, here. Ironically as I was finishing this blog post I saw my latest Gilt. Sushi making and Sake tasting at Nobu anyone?
While Jewelry brands have embraced the flash sale sites to unload dead inventory -- although a goodly portion of the product on Gilt. To their credit the flash sales are not search engine optimized and they protect the brand names from appearing in online searches. But of course there's no keeping a good secret online and some bloggers have made a business out of "outing" the private sales! My favorite deal hunters are SampleSaleSites.
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The sales last just days and most of the designers I've watched do it just once or twice a year. I understand retailers feeling threatened but overall I wonder just how much business they can "lose" to a temporary flash sale and just how good the exposure is for overall brand recognition and impression. I'd like to hear from some retailers for real experiences rather than listening to conjecture and fear. There's a lot of perceived threat but I'd like to know about actual damages. Or lack of it. There are many tales to be told about sales going UP in a traditional jewelry store once the brand opened their own store or appeared on QVC with a lower-priced line.
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The increased exposure and awareness should help everyone. Of course that's most true for those that put in the effort to work the waves, so to speak. Capitalizing on the designers' growing fame is a necessity. Working in partnership to make sure the product mix in each outlet is unique and the pricepoints don't compete is just good business. As for the penny auctions -- I can't see any value to traditional business here. But I see no adverse affect, either. The group couponing craze is another matter.
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