I have always been a fan of daily deals websites, which cater perfectly to my impulsive needs, and I always look forward to my daily round-up email of the local deals I can take advantage of. However, insightful research from Forrester may make businesses think twice before they partner up with a daily deals site.
51% of deal buyers surveyed in the report say they would have bought from those merchants without the discount.
You may be thinking, so what?
Daily deals users are customers of merchants
But as Forrester analyst Sucharita Mulpuru, who co-authored the report, points out, this means daily deal sites such as LivingSocial and Groupon are not necessarily driving valuable revenue. The problem seems to be particularly bad for restaurants and retailers.
Mulpuru said: “There’s a big disconnect between the incrementality that all these companies, particularly prepaid voucher companies, are purporting to provide versus the reality of it.
“A significant part of their [daily deals sites] growth is coming from consumers who buy deals but are also most likely to be consumers of those merchants anyway.”
This suggests that those who are buying the deals would happily buy the product/service anyway from the merchant, but take up the offer because it’s there.
The headline figures
Out of those surveyed who said they had previously done business with the merchant:
- 63% had previously paid for meals at restaurants, which is the most popular deal category
- 63% had previously bought from businesses selling health and beauty products
- 67% had previously purchased items from home and garden suppliers
- 80% had previously bought from clothing and accessories merchants
However, daily deals users were more likely than normal to part with their money when it came to spa offerings and activities, such as wine tasting and para-sailing. In both categories, less than 50% of those surveyed said they’d previously frequented the business for which they’d bought vouchers.
Further research to back up study
The Forrester findings are not new in their conclusions; a study by researchers at Rice University and Cornell University earlier this year came to a similar conclusion, stating that “none of the users seems to believe that they are buying unusual products (ones they normally would not buy) because of daily deals to a significant degree.”
Even more interesting is that it found that all types of daily deal users “confidently agree that daily deals help them save money on things they would have purchased anyway”.
With the news of this study, daily deals sites are going to need to do more to lure in merchants to sign up to their service. As we have previously seen, Groupon has already had a significant amount of bad press concerning the value of the site for businesses.
“What’s good for Groupon is not good for merchants,” Mulpuru said. “They haven’t been able to create a win-win scenario.”
Will Groupon survive?
In its pitch to local businesses, Groupon promises merchants that the discounts offered through its website will bring “valuable new customers, guaranteed.”
But if there is little value for merchants to sign up for their service, then Groupon may very well go down the gutter.
What do you think?
Have you had any experience of dealing with these daily deals sites? Have they helped your business?