Let's Make a Deal! Popular Deal Sites Changing our Shopping Habits
Sites like Groupon, Living Social, and Plum District have changed the way we shop for clothes, restaurants, entertainment, and items like makeup or stationary.
We aren’t saying goodbye to clipping coupons or customer incentive programs, but deal sites are definitely an attraction for many people. Although, with the number of deal sites now, some people are disregarding offers waiting in their email inboxes because they are flooded with offers. Recent news reports say the deal site marketing is dwindling down; even Facebook stepped out of the market. Aside from the giant sites, the smaller sites that will survive are ones that have a specific niche.
Last week, consumers in San Francisco, who subscribe to Plum District, had an opportunity to pay $20 for a bottle of Parducci House Wine and three tasty appetizers at Unwind on Union – a $40 Value. In Washington D.C. it was similar savings to Wegman’s, a gourmet grocery store and eatery, with a deal of $5 for a $10 Gift Card – this deal sold out quickly from savvy moms who do the grocery shopping. While in Dallas, and other cities across the nation it was the best family deal of all from Plum District, a deal site for moms by moms. Plum District ran a deal with Family Getaway of $100 for $300 towards a family vacation package.
While Groupon and Living Social are the dominant deal sites, Plum District is targeting a specific consumer – Moms. Moms not only do the majority of a household’s shopping, Moms are looking for creative ways to save money in this economy. According to Shannon Gallo, Regional Manager for Plum District, “Plum District is a fast-paced, fast-growing, fast-thinking startup that’s well-funded, successful, and ambitious. Our mission is to make mom’s day by bringing daily deals to them locally. Our mission is also to provide entrepreneurial opportunities that fit moms’ lifestyles, when they choose to work for us.”
Basically, the services all work the same way. A local hair salon, for instance, agrees to heavily discount goods or services, offering a $120 Highlight and Haircut for $65. The service, like Plum District Dallas’ Jump, Jive & Wail Salon deal, sends the deal to its subscribers, and also offers the deals on its website or Facebook page for a $65 voucher. Consumers use a credit card or debit card and pay the $65 upfront. The service and the merchant, a salon in this case, share a percentage of the purchase price.
Jump, Jive, & Wail Salon Owner, Diane Bevan, used Plum District Dallas because of its “For Moms by Moms” approach. She has been approached by larger companies like Groupon previously, but was intrigued to promote her business, located in Frisco Texas, with Plum District since the company specifically targets women in her own community. “There are a lot of women who are new in town, or are unhappy with their current stylist, and giving a deal is an incentive for someone to try our salon.”
Kirsten Huffman, a senior stylist at Jump, Jive & Wail, has worked there for seven months. She said at first she was unsure of the success of running a deal but the outcome was positive for her. “I have provided services for 3 new clients, and they have all rebooked for future services, I’m more than pleased,” said Huffman.
According to a Rice University Survey, published in June 2011, 77% of deal buyers for Groupon, Living Social and other specialty sites (like Plum District) were new customers, all spent more than the deal’s value, and an average of 20% of these new customers became repeat customers. 41% of businesses said they would offer another daily deal, while a third were uncertain.
Utpal Dholakia, author of a study on Groupon and associate professor of marketing at the Jones School at Rice University, conducted surveys with 150 businesses spanning 19 U.S. cities and 13 product categories that ran and completed Groupon promotions between June 2009 and August 2010. Parallel to Plum District’s marketing research of its products, Dholakia found that Groupon promotions offer the most benefit for businesses in which the promotion does not cannibalize sales to existing customers.
"I think these findings show that social promotion companies need to better balance consumer appeal with positive outcomes for the small businesses offering them," said Dholakia, quoted in a Rice University press release, "Right now, these deals are tilted too far in consumers’ favor."
For some businesses, using daily deal sites might help boost sales and increase customers, for others, it may not. As long as business owners are aware of the pros and cons and have realistic expectations, they may try this as a new marketing tool. As for savvy shoppers, there will always be a deal out there waiting in the inbox. With the holiday season approaching, the deals are sure to get sweeter as businesses battle for a piece of the retail pie.
# # #
Plum District is a deal site for the Savvy Moms. Treat Your Family. Reward Yourself.
Daily Deal discounts include restaurants, baby, beauty, health, fitness, travel, events, home, and more.