Deal-a-day websites change marketing strategies

Sceptics of deal-a-day websites such as Groupon and LivingSocial often predicted that these websites would see their sales decline once the economy recovered and people weren’t as concerned about saving every dollar or pound.  Surprisingly, however, these deal-a-day websites have grown from strength to strength. Chicago based Groupon, the leading deal-a-day website, has grown from 2 million subscribers to over 85 million over the past year. Similarly, LivingSocial grew from a paltry 120,000 users to over 28 million over the same period. In just three years this particular business model has changed local advertising, delivering faster results than other traditional marketing methods. Store owners get immediate access to revenue and can observe exactly how many customers each offer manages to bring in. Analysts say these websites thrive because they help both merchants and consumers without requiring any specific technical expertise from the former. They see this as a new category of commerce that has changed the way companies market their products. Some companies though, complain that Groupon forces upon them an unfair cut in prices and the sudden influx of the huge numbers of customers overwhelms them. However, employees at Groupon respond that companies always have the option to cap the number of coupons sold. Some companies view deal-a-day coupons as promotional expenses and are willing to take losses on them. Others don’t do the precise calculations and end up getting their fingers burnt. Nevertheless, deal-a-day websites are expected to generate as much as $ 2.7 billion in revenues this year. That figure is expected to go up to $ 4 billion by 2015. Although that is still only a small slice of the $ 142 billion that is generated by the total online retail sales, revenues from daily-deals are growing faster than overall e-commerce revenues. Small businesses have adopted the model as a way to hook new customers in this digital age. Traditional methods of advertising are either too expensive or no longer provide attractive returns on investment. Google search results, though measurable, do not provide the immediate results that small businesses need. This is where Groupon and LivingSocial step in and work their magic. Analysts at Pipon Solutions invite your views on such deal-a-day websites.