The End of Full-Price Retailing?
What’s the deal with daily-deal sites?
A study by Rice University professor Utpal Dholakia has added fire to the love-hate relationship brands have with daily-deal sites. While a daily “salemail” plays matchmaker, delivering consumers to the doors of businesses, these consumer-brand relationships are short lived. Only 20 percent of consumers return and a mere 36 percent purchase beyond what's offered in the daily salemails.
Consumers have come to expect deals. Does this mean the end of traditional full-price retailing?
An ominous bell is tolling for daily-deal sites. Groupon may be growing like kudzu, but it's losing money as more daily-deal sites like LivingSocial enter the marketplace. But don’t count out daily salemails yet. Daily-deal sites are recalibrating by offering a cache of products that drill down to a particular neighborhood, drum up repeat business and calculate metrics. What’s the real deal? Business owners can now design the right daily salemail to fit their brand experience.
Picking Daily Salemails
Leading the charge is Groupon with a trio of new services, which allow brands to offer real-time coupons, schedule deals, reward consumers for purchases, and offer discounts for consumer electronics and other goods. Some daily-deal sites are breaking ground and snatching up Groupon’s marketshare. BuyWithMe’s new service, MerchantConnect, dove into unchartered waters by empowering retailers to track the success of deal campaigns. Entrepreneur reports that Bloomspot’s performance-based algorithm allows it to “predict consumer spend and return levels for each promotion” and guarantee business owners’ return rates.
While the number of people using daily-deal sites is decreasing, according to CNN, consumers are enthusiastically scavenging for savings from Scoutmob, a daily salemail with a mobile twist. Instead of forking over money for deals up front, Scoutmob tempts the “locally curious” about establishments. Consumers purchase deals on their mobile device in establishments. This new school daily-deal site also has the power to drum up repeat business.
Buy. Enchant. Repeat.
Daily salemails are evolving into interactive mobile apps. Scoutmob explorers can find and redeem their savings right on the spot. The third bring-them-back element of the brand experience is converting business owners to brand fans. After consumers receive superior service and redeem their deals, more chances to save pop up on their Scoutmob app. The service incentivizes shoppers to return for a second helping of the brand experience.
Daily-deal sites are hopping on the bandwagon of QR codes and interactive scavenger hunts. The LevelUp app is in just two cities, Philadelphia and Boston, but it's already showing promising results. Forty percent of consumers who redeem LevelUp deals return to participating retailers. That’s 20 percent more than other daily-deal sites can boast. LevelUp also features an addictive gaming component. Consumers make purchases via the LevelUp app at participating retailers and their discount is automatically applied. But they can’t stop with one purchase. Chances to “level up” and unlock better deals await consumers at every visit.
Consumers are indeed coming back. However, full-price retailing is not. Daily salemails can play matchmaker and create consumer/brand relationships. What should retailers do to convert these one-off consumer hookups into long-term brand love? That’s another deal. At least the odds are in brands’ favor.