Editor's Note: Quick, Read THIS NOW!
I thought I'd open up this month's Editor's Note with a discussion about the daily deal/flash sale/group buying trend that's taking over the internet these days.
Who can forget about this past summer when Groupon launched its first nationwide deal of the day — $25 off a $50 purchase at Gap. The frenzy created by the promotion briefly crashed Groupon's server as consumers clicked on the discount. In the end, the deal brought in $11 million in revenue, as 445,000 shoppers paid for the Gap vouchers. (Groupon generally splits revenue with its participating merchants, but both companies declined to disclose their shares).
Regardless, to me this was a bellwether moment for deal-of-the-day sites. When they started popping up online last year, I initially wrote them off as nothing more than a fad. There was no way a company could sustain this kind of business model, I thought. Boy, was I wrong. In addition to the Groupon/Gap deal, there have been many other big announcements in the daily deal/flash sale/group buying space. Consider the following:
* In July, Twitter adopted a daily deal/flash sale/group buying business model with an account called @Earlybird, which is used to promote "time-sensitive and sometimes supply-sensitive" products and services.
* In September, Gilt Groupe announced that it's rolling out its Gilt City program in six locations: New York, Boston, Chicago, Miami, San Francisco and Los Angeles. A subsidiary of Gilt Groupe, Gilt City offers three or more limited-quantity sales in each local market every week. Each sale lasts seven days.
* Group buying site LivingSocial last month expanded into an additional 25 new markets in the U.S., Canada and the U.K.
There seems to be a trend here. But what's in it for retailers? While some wonder whether the Groupon/Gap deal was a boon for Gap (after all, customers got their merchandise at low cost, and who knows if they'll be back again to buy more), I believe it's a positive for the apparel retailer. After all, it created great word-of-mouth marketing and got people into its stores. What do you think? Let me know by dropping me a line at email@example.com.