If there’s one thing in a marketing sense that has risen out of the recession it’s the rapid development of websites that promote heavily discounted deals for just one day of sales. These one day deal sites are simple and pitched to businesses as being effective in getting large volumes of sales in a short period.
New sites of this nature seem to be popping up on a regular basis with dozens that are New Zealand based. Some of the big online media companies feature strongly in the line up including APN Media’s GrabOne and Trade Me’s Treat Me. There are so many that there are now websites that aggregate all of the one day deals as a quick way to see them all.
It’s unlikely all of them will survive successfully and you have to wonder how willing businesses will be to continue to discount by such large degrees (typically 49-50%) as the economy improves. It’s likely the deals will get less attractive over time and therefore lose their high traffic volumes or perhaps they will just evolve with less focus on heavy discounting.
There’s no doubt they offer an attractive short term marketing tactic for businesses, but are they really a good strategy to undertake?
Let’s analyze the pro’s and con’s from a business perspective…
- Great exposure to a mass audience
- Little or no upfront cost (typically they take a cut of sales made off their site)
- Can create sales and demand that the business otherwise wouldn’t get
- Provides instant cash flow
- If a service provider delivering the service may well be spread out over a long time so low stress on meeting demand
- Could deter sales at the normal price and so may cause slower sales after the deal is no longer available
- To achieve big volumes of sales you generally need to offer a considerable discount which will drop yields and profitability
- Selling at discounted prices doesn’t guarantee ongoing business
- Demand may well be significant and hard to meet if you are a small business
Each business thinking of actively offering these deals needs to consider the pro’s and the con’s – does discounting help or hinder your brand image? Do you really want to be flat out busy at very low margins? How will this affect your regular loyal customer relationships? Can you afford such large discounting?
I’d suggest you try being creative with your offers rather than just straight discounting and include terms and conditions that suit you so you don’t find your business losing out in the long run.
These websites will suit some types of businesses more than others – before you go into it make sure you can deliver good service on what you offer.
Have you tried this for your business already? Got any good tips or stories of success/failure to share? Feel free to leave a comment.