Sunday July 21, 2019

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Daily Deal Promotions Pose Risk for Merchants, Says Study

CHICAGO, IL - JUNE 10:  The Groupon logo is di...

Image by Getty Images via @daylife

Not too long ago daily deal coupons excited both consumers and merchants who hoped to attract new customers. Groupon, the largest deal maker of all, was estimating its self-worth to be $30 billion, after snubbing an offer from Google for $6 billion. Now, The New York Times reports, the coupon rush is dwindling. Groupon’s public offering has continually been put off amid stock market turmoil. Copycats, including Local Twist in San Diego, RelishNYC, and Crowd Cut in Atlanta, are either closing, reformulating or merging to avoid being completely diminished.

The paramount issue lies in the inherent contradiction of shopping coupons via the Web. As The New York Times states, consumers were being told they’d never resort to paying full price again. Merchants interpreted this as they’d get new customers who would pay full price. The problem was intrinsic to the design.

According to a study by Harvard University and Boston University, merchants may be at risk. Consumers, thanks to the coupon phenomenon, have developed a “bargain hunting” mentality, as fans of daily deals are becoming increasingly difficult to satiate.

“Offering a Groupon puts a merchant’s reputation at risk,” Professor John Byers, computer science dept. at Boston University told the Times. “The audience being reached may be more critical, than their typical audience or have a more tenuous fit with the merchant.”

The New York Times