Daily Deal Promotions Not Working for Small Retailers

As we’ve written about before, daily deal sites such as Groupon and LivingSocial often do not achieve the intended results for retailers — namely, to offer a deeply-discounted deal through a Web site coupon that gets people to visit a retailer for the first time and then become repeat customers at the regular prices.
Here’s more evidence that the hey day of daily deal sites may already have passed. As Karen Klein writes in a November-December 2012 article for Businessweek: “This holiday season, Josh Neblett, co-founder and chief executive of online retailer GreenCupboards, plans to use e-mail blasts, Facebook ads, and joint promotions with suppliers to get the word out about his ‘eco-friendly’ merchandise. One weapon not in his arsenal: daily deal coupons. ‘We did three different LivingSocial deals last fall, and at the end of the day it did not pencil out enough for us to continue,’ says Neblett, whose 55-employee Spokane (Wash.) company had sales of $7.2 million last year. ‘The average net loss per order was significant, and the average customer we gain through our own marketing initiatives repeats business with us at a significantly higher rate.’”
Click the image for Klein’s full article.

Daily Deals Not a Hit

Illustration by Andy Rementer


This entry was posted in Online Retailing, Part 2: Ownership, Strategy Mix, Online, Nontraditional, Part 3: Targeting Customers and Gathering Information, Part 6: Merchandise Management and Pricing, Part 7: Communicating with the Customer, Social Media and Retailing and tagged , , , , , , , , , , , , , . Bookmark the permalink.

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