Daily deal sites are gaining more traction as a widely accepted way to shop online. But as these advertising hybrid machines become increasingly popular, some merchants are still standing behind the starting line wondering what all the fuss is about. So what’s the “deal” with daily deal sites anyway, and why should you be paying attention?
How Daily Deal Sites Work
Many of these Websites operate under a general basic premise: They earn advertising or affiliate revenues when they refer shoppers to the retailers and earn a percentage of that sale. In turn, they pass on some of that revenue to the shopper in terms of savings or a rebate. FatWallet and Ebates, for instance, offer a list of hundreds of retailers offering cash back on purchases-but you have to reach the retailer’s site via FatWallet’s or Ebates’ link in order to earn that cash back. In short: If FatWallet or Ebates earns money, customers earn money for shopping with them.
It’s a genius model based on a win-win premise, and it’s set up in such a way that the deal sites really can’t lose. As long as shoppers are using them, they’ll earn money.
Why should you care, as a retailer? Because many of your competitors are participating and you could lose many daily deal-site shoppers as a result. Not to mention, you stand to earn a boost in traffic from users who normally wouldn’t shop with you but happened to see your name next to a favorite retailer and decided to check out your business.
If you’re still confused about how this business model works, consider these scenarios.
• You want to buy a new pair of sneakers. You can purchase them through Retailer A or Retailer B. Both retailers offer the shoes at the same price. But Retailer A is listed on a daily deal site, and you could earn five percent cash back if you purchase from there. Which one will you choose?
• You’re searching for a tablet PC online. You checked your local store, Retailer A, but wanted to see if you could find a better deal online. Retailer A’s Website shows the same price for the tablet you want, and you’d have to pay shipping costs. But it turns out Retailer A also has a listing on a daily deal site, so if you purchase your new tablet via that link, you could earn 10 percent cash back on the purchase and get free shipping. Are you going to buy at your local store or make a purchase from the same company online via the daily deal link?
Groupon and LivingSocial Explained
Groupon operates a little differently than most daily deal sites. Groupon offers a deal each day to shoppers in a specific region via email. But in order to get the retailer or business to make a substantial discount offer, Groupon has to guarantee them a certain number of customers to make it worth their investment. This is where it gets tricky for consumers: If a user signs up for a deal, but Groupon doesn’t meet its minimum threshold of customers, no one gets the deal.
LivingSocial also sends daily deals out, but via a Facebook app. Most of these deals are for local restaurants and businesses, and users can click “more deals” to see additional offers beyond the daily feature.
Facebook Offers: Viral Deals on a Social Network
Facebook Offers technically isn’t a daily deal site but does serve a similar purpose. With Facebook Offers, a business can offer a special deal to followers, friends of followers and the public. When a user claims the deal, it becomes visible in his news feed, and so on, creating a viral sales message.
TechCrunch reports that out of the 100 most popular Facebook Offers, 75 percent of the claims came from users who were not initially targeted. Instead, they came from friends of users who had shared the offer. With this kind of viral response rate, it’s worth a shot to promote your next great deal with a targeted Facebook Offer.
Google Offers: Next Great Deal Site?
Google Offers is a little newer on the deal scene, but the search giant has a back pocket full of user data from users’ personal browsing sessions, emails and social activities. It stands to set itself apart with full customization features, allowing users to select not only location but the types of deals they’d like to see. Subscribers are sent email notifications each time a deal matching their criteria becomes available.
These are just a few of the many daily deal sites cropping up, and the competition is fierce. Consumers are looking to get the best deals possible, and online shoppers are quickly catching on to the idea that they can get a bargain if they play their cards right. For online merchants, participating with these deal sites can only stand to benefit your business.