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Online promos: What’s working for local merchants?

May 5, 2014

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With Groupon Inc. set to release earnings May 6, it’s a good opportunity to take a look at the evolution of the daily deals / couponing craze several years after it peaked.

(And Mother’s Day, coming up May 11, likely will drive even more than the usual number of promos, which will help you find timely examples and small, local merchants/services that depend on discounting to boost business.  The National Retail Federation says consumers are being more frugal and practical this year in their Mom’s Day shopping, with expected spending dropping from $168.94 last year to $162.94 in 2014.)

Daily deals sites were hailed several year ago and Groupon’s initial public offering was the biggest dot.com stock sale since Google – but as Forbes pointed out last fall, the novelty of an e-mail inbox full of offers has paled in consumer eyes and the company still is seeking a permanent niche.  Analysts this week forecast a loss for Groupon, which appears to be morphing into a discounter of physical merchandise from its origin selling half-off coupons for services like massage therapy and restaurant dining.

New reports, like this one from Bloomberg, “Groupon selling razors in bulk furthers move from deals,” point out that the company’s Basics unit is selling household staples, offering free shipping on orders above $24.99 without an Amazon Prime-like subscription and otherwise turning into an e-commerce site.

All of which is to say, there seems to be a bit of fizzle in the online deal and promo market, and it would be interesting to speak with local shops and service providers about what’s working and what’s not when it comes to consumer promotions.  How are your area’s restaurants, salons, boutiques and service providers from chiropractors to lawn mowers adapting?  Check out who’s advertising on Groupon, Living Social, Amazon Local and other sites; is there overlap?  How do the offers vary?  What does it cost a small business to pull in new customers this way?

How do social or daily deal offers compare to print coupons in direct mail ads or packets, and how do those channels compare to mobile coupons, when it comes to drawing new customers or attracting repeat business.  It appears that consumers are fed up with unsolicited deals clogging their e-mail inboxes – UnsubscribeDeals.com popped up as an antidote to that – and that text & mobile coupon apps are burgeoning.  EMarketer reports that 55 percent of adult consumers will redeem at least one digital coupon in 2014 and that the mobile coupon audience is posting double-digit annual growth.

Anecdata alert: A regional health foods market near me has been sending out paper coupons weekly for years but they’re easily lost in the shuffle.  I’ve noticed my casual visits to the chain increasing since the coupons started showing up as texts on my mobile phone.  When one doesn’t have to kick oneself for forgetting the coupon, one may be more likely to drop in.  It’s worth asking merchants and consumers about.

Here’s an interesting article about online promo aggregator RetailMeNot using geofencing to offer location-based deals.

DailyDealMedia is an industry publication with useful articles and links.  Other sources might be the payment services unit at your region’s banks; note this briefing paper from PNC Bank aimed at its business consumers; it cites a variety of online couponing statistics.


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