Nothing in life comes for free, however you can get everything at a discount. It’s now a fact of life that everything, and I mean everything, can be purchased at a discount! It started way back in the day with Amazon giving away free shipping to incentivize consumers to give them a try, but in the last couple of years it’s spread like wildfire. There are two primary sources of deals and discounts these days, and the path is blazed by GroupOn and RetailMeNot.
We all know about GroupOn, Living Social, HomeRun and the host of companies that have emulated their business model by offering daily deals and discounts for any subscriber. These businesses provide discounted access to services and products, sometimes as high as 65-75% off the original cost. These deals are limited in nature, and serve to provide companies with a temporary bump as well as access to a whole new pool of potentially loyal customers. When used properly, these services provide an invaluable lead generation opportunity that can benefit a brand.
RetailMeNot is the enigma in this space, and one that definitely benefits consumers, though I’m not 100% certain it benefits brands. If you’ve ever visited the site you know they offer coupons and discounts on all kinds of brands and services. The way I use them is pretty simple; whenever I’m about to buy anything online, I open another browser window and type in the retailer to see if they have a coupon saved. The results tell the likelihood that the coupon still works, and in almost every case I end up saving money. I recently bought a pair of golf pants from a niche retailer, and ended up with 20% off. I had no idea RetailMeNot ran so deep in the retailer category, but after that experience I was absolutely sold – I will never pay full price again!
As a mentioned, this kind of service is amazing for consumers, but I have to think retailers are not too excited. If a retailer forgets to pull down a coupon code, or remove it from their checkout system, it can live in perpetuity. Some of these codes are holiday codes that may have been forgotten about or passed by, and I’m sure the retailers never intended to give me a Christmas discount in June.
Coupon cutting is all the rage online, and there are numerous cases where brands offer limited time coupons to their most loyal customers, and websites or blogs take them and run, making them available to their hundreds of thousands of readers online. Brands actually pay for these coupons, and when a coupon goes “off the reservation” like that, it can cost a brand hundreds of thousands of dollars to keep up. The other concern here is that daily deal sites and coupon discounts are teaching a whole generation of shoppers that the ticket price is rarely ever the actual price, so retailers and marketers are going to have to factor this into their pricing strategies going forward. Will retailers start pricing higher to satisfy the discounts they offer? Will some retailers adopt the old “Saturn-like” pricing of “no haggle, stress free shopping”? Will the online retail marketplace just become a means of under-cutting local business?
This last question is a timely one as Congress mulls passing an online sales tax to be enforced on a national basis. I personally think it is only fair that online businesses charge a sales tax because these companies create significant revenue that may not be properly used to cover state or federal expenses, but they are taking away sales from local business that do pay those taxes (or at least they used to). I read recently that online sales take away billions of dollars in state and federal taxes, and that could help us in a period where we should be trying to balance the budget.
There are a lot of moving parts to this discussion, and in the majority of the argument the consumer wins, (which is great). I just hope we aren’t setting a bad precedent for years to come in retail.
What do you think?