Citrus Brunch…on coco+kelley! Groupon and the Online Deal Revolution. While the vast majority of coupons are still clipped from Sunday newspaper inserts, digital coupon usage is growing rapidly.
In 2011, nearly half of all online consumers will redeem digital coupons online or in a store, eMarketer forecasts. Increased usage and acceptance of mobile coupons will ensure future digital coupon growth. “Several factors account for the rise of digital couponing,” said Jeffrey Grau, eMarketer principal analyst and author of the new report, “Coupon to Groupon: New Channels for an Old Tradition.” “The recession, the increased use of the internet as a shopping and research channel, and, of course, the immense popularity of daily deal sites like Groupon and LivingSocial have created a new form of online deal hunting.”
This year, eMarketer estimates, 88.2 million US adults will redeem an online coupon or code for use either online or offline at least once. Morpace reported that 32.5% of internet users had downloaded Groupon coupons, for example. How Social Shoppers Share Local Deals. Growth in daily deal site usage is still rapid, according to April 2011 site rankings from Compete.
The analytics firm reported that visits to Groupon rose 5.4% over March and a dramatic 655.8% over the previous April to 24 million uniques. At the same time, competitor LivingSocial increased unique visitors by 32.7% month over month and 418.4% year over year. These sites depend not only on consumers purchasing their highly discounted local deals, but also on consumers sharing them. And research from mobile Wi-Fi hotspot provider JiWire suggests many web users are doing both. In a Q1 2011 survey of its Wi-Fi Media Channel users, JiWire found that 44% made a purchase from a social shopping deal site, such as Groupon or LivingSocial, at least once a month. Purchasing local deals was more frequent among users under age 45. Daily deal sites typically encourage users to pass along offers to friends and family via email or social media, to spread usage virally. Why Daily Deals Are Becoming A Raw Deal.
Editor’s note:This guest post was written by Rocky Agrawal is an entrepreneur who has worked on local products since 1995.He blogs at reDesign and Tweets @rakeshlobster. In the wake of Groupon’s IPO filing, it’s worth looking at the fundamentals of the offer. Growth numbers to date have been phenomenal. But is it a business that can last?
We love daily deals for a simple reason: the deals have been outstanding. If revenue growth in the first Internet bubble was about selling a dollar for 50 cents, growth in the daily deals business has been about getting other people to sell their dollars for 50 cents and charging them 25 cents for the privilege. Living through the worst recession in our lifetimes has made such deals even more appealing. The deals have been embarrassingly good. That’s a great deal for me, but it’s unsustainable for the business. For most local restaurants, the cost of food alone is 25-30% of the price. Deal economics The general deal structure is something like this: Half Price Toledo:
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