Why do national retailers use Groupon?

The short answer is I’m not sure… I read this news release by American Apparel talking about how successful Groupon was for them in the U.S. and how they want to expand the program to Europe. I am a bit confused why a national retailer would work with a daily deal website. Here are the top reasons to work with a daily deal website in my opinion: 1) Access to broader customer reach and larger audience than merchant can do on its own. 2) Acquire new customers – although likely that a large percentage of customers are repeat purchasers who just can’t pass up a good deal to a merchant they like. 3) Test and try a new type of advertising that is getting a lot of hype and press right now – leverage it for PR and other marketing purposes. 4) Performance-marketing – only pay (or get paid more specifically) for success/sales, not for impressions or clicks – good in theory although the high 50/50 rev-share is generating merchant push-back. Basically, I can’t think of any other compelling reasons to do it… Now comes the reasons why national merchants tend to avoid daily deal sites… 1) Branding inconsistency – highly branded national advertisers tend to value their brand and likely don’t like the association with coupon websites. 2) National retailers, especially the larger ones, already have massive consumer reach and distribution. Many have email databases of over 20 million consumers, although many are less responsive than the average email list for a deal-site – The largest retailers have the resources and consumer-reach to launch their own daily-deal site, which several are already doing. Even if they reach fewer people than they could working with a deal-site, they don’t need to share anything and drive consumer loyalty by speaking to their shoppers.

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