The Ebb and Flow of Daily Deals and Online Coupons

More consumers are using daily deal sites and online coupons than ever before, but are they really here to stay? Businesses weigh the benefits and disadvantages of slashing prices and giving the deal site a cut in their overall  marketing strategy.

Online Coupons

Close to 50% of all online consumers will redeem digital coupons this year. Sunday coupon clippers are still the norm, but online and mobile coupons are growing like wildfire. The advantage for small business owners is that offering coupon codes online is an affordable way to get new customers, and the adoption of mobile coupons is cost effective and appeals to the tech-savvy set. eMarketer

Even the smallest business can use couponing as part of its marketing strategy. By incorporating mobile coupons and web versions, small businesses can reach a wider audience with their discount strategy than with traditional print coupons found in the Sunday paper. Entrepreneur

The Race to Win

While Groupon may have been the first out of the gate to connect small businesses with consumers through its daily deals, LivingSocial is quickly closing the gap. While LivingSocial has over 4 million monthly unique visitors to Groupon’s 29 million plus, LivingSocial offers deals in nearly double the cities as its competitor. LivingSocial may be a bigger draw to small businesses too: the deals site takes only 40% of the deal’s profit, versus 50% by Groupon. Online Marketing Trends

With as many daily deal sites that have sprouted up in the last year, it should be no surprise that Amazon wants a cut of the multi-billion dollar industry. The online retailer currently offers deals for entertainment, restaurants and services in 30 markets with its recently launched AmazonLocal service. What makes it better than the competition? It’s unclear, other than the fact that can heavily advertise it in conjunction with the products it sells on its site. The New York Times

Do Daily Deals Cannibalize Brands?

While many restaurants and storefronts are seeing higher traffic by offering daily deals, the end result might not be as bright as they hoped. In offering steep discounts on services and meals, businesses may be lowering consumers’ reference price that they expect to pay. Once the deals are over, they may be less likely to come back as repeat customers, and may instead shop solely on price. While sales pour in with the initial deal, they have proven to dwindle after the fact. Harvard Business Review

Despite the flurry of deals for everything from flowers to yoga classes, the daily deal industry has declined over the past month. Yipit, a deal aggregator, did a bit of research and discovered that industry revenue declined by 7% from June 2011 to July, moving from $144 million to a measly $134 million. The cause is unclear, but may be due to the deluge of deal sites, or a typical summertime slump, such as what is seen in other industries. TechCrunch

With so many small businesses losing money with the daily deals they offer, it’s clear that there needs to be better marketing strategy surrounding the price slashing. Small businesses should be picky when choosing a daily deal site to work with, and should prepare for a flood of business just after the deal. Not every deal is a good one, especially if you lose money. Make sure to cover your profit with the cut the deal site takes. SBA

New Approaches

As consumer grow weary of daily deals emails flooding their inboxes, the sites look for new ways to connect with customers. One effort in this direction is partnerships with location based services like FourSquare. LivingSocial and now Groupon have partnered with the mobile app company that allows users to check in to locations for discounts. The assumption is that users will get deals based on their location that offer the deep savings that the websites offer. Will small businesses latch onto this any faster than they did offering deals directly through FourSquare? Time will tell. The Wall Street Journal

Those funny little boxes on the corner of magazine pages and on museum signs are starting to catch on, it seems. QR codes are popping up in stores, restaurants, billboards and museums, and they’re proving multifunctional. While consumers scan the codes with their mobile phones out of curiosity or to get more information about a product, the majority, 46%, scan QR codes to get a discount on a product or service. As more innovative uses for QR codes pop up, we may see a decline in print coupons. Bob Kaplitz Blog


Just like every new industry that comes along, we’re becoming oversaturated when it comes to group deals and online coupons. Everyone, including Amazon, wants a piece of the pie. But when the slices get cut too thin, we’ll see many deal sites fade away and just a few players rise to the top. For small businesses, this may mean they need to take a wait and see attitude, and see which opportunities will actually result in smart marketing and profit. Today Money


Joshua Sophy Joshua Sophy is the Editor for Small Business Trends and has been a member of the team for 16 years. A professional journalist with 20 years of experience in traditional media and online media, he attended Waynesburg University and is a member of the Society of Professional Journalists. He has held roles of reporter, editor and publisher, having founded his own local newspaper, the Pottsville Free Press.