What Kinds of Businesses Benefit From Coupons and Daily Deals?
Wednesday, July 24, 2013
Group buying and daily deal sites have been experiencing quite volatile times during last months. The struggles of Groupon and LivingSocial, along with controversial evaluations regarding efficiency of daily deals for merchants, have undermined the belief of some entrepreneurs in the deal-of-the-day concept. Nonetheless, fueled by the consumers’ love for a bargain and supported by the diverse benefits of the model for businesses the daily deal space stoutly resist the market collisions. Business owners are always looking for efficient and cost-effective methods of attracting new customers. Coupons and deals is a great way to accomplish this goal. Food, drinks, beauty, health, baby products and other popular deal categories continue to provide a solid base for further development of the deal industry.
A common complaint from vendors about low revenue from running daily deals is not really fair because a deal promotion is more an advertising tool than a direct method of generating income. As a form of advertising, daily deals are highly beneficial for small companies because deal websites provide an even foothold for all players, whether it is a local shop or a big national retailer. So, a deal offer of a small family cafe may be listed and distributed together with a similar offer of a prestigious restaurant. Moreover, running a deal promotion does not require an upfront payment from the vendors which is not typical for the traditional forms of advertising on TV, radio and in print media.
It is important to understand that the daily deal model does not work equally for any business. A recent research by Rice University showed that the deal promotions work well for health and fitness services, doctors, dentists, tourism services and photographers. Restaurants, bars, cleaning services, retailers and some other businesses that repeatedly run deal offers have a lower success rate. So, if you have a dance class or a yoga studio and you have the problem of low attendance, daily deal offering is a perfect solution for you. Filling the room is vitally important for that kind of services because people do not like to attend empty classes. Besides, there is a big chance that the coupon users will return at full price if they enjoyed the first training.
Daily deals also work well for online businesses, because they have small overhead charges and the low margins present a lesser problem for them than for traditional companies. Besides, online businesses have better chances to take daily deal operations into their own hands and carry out their deal promotions bypassing Groupon or other daily deal publishers.
The merchants and service providers are the main driving force of the deal business but they are not the only ones who benefit from daily deals. The daily deal industry provides opportunities for making money for many other businesses as well. Daily deal site owners get a percentage of the deal offers sold on their websites. Daily deal aggregator sites earn money through affiliate commissions and advertising options. Providers of daily deal software and website developers are in demand for building the daily deal websites from scratch, supporting deal websites that already exist and for development of applications and tools needed to run a successful deal business. Media and analytics services that collect market data and report news within the daily deal landscape also get their part of the profit pie.
So, it is not just the merchants and the daily deal websites that are involved in the deal-of-the-day business. This diverse and dynamic industry is more universal than it might seem and there are many ways to make money in the daily deal space.